Nkangala Agri - Park
FINAL MASTER BUSINESS PLAN
APRIL 2016
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This Report has been read and approved by:
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Chief Director: PSSC Head Date
Ms. Z Sihlangu
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REID Director: Mr. MC Madolo Date
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RID Director: Ms. A Mametja Date
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Nkangala District: Rural Development & Agricultural Officer Date
Mr. HM Rantho
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URBAN-ECON DEVELOPMENT ECONOMISTS Suite 203 Metropolitan House 15 Russell Street Mbombela 1200 Tel: 013 752 4932 E-mail: [email protected] Website: www.urban-econ.com
Manstrat Agricultural Intelligence Solutions Tel: 012 460 2499 Email: [email protected] Website: www.manstrat.co.za
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Nkangala DM Master Agri-Park Business Plan Road Map Chapter 1: Introduction Chapter 2: Agri-Park Model
Summary: An introduction to the master business plan report is provided in this Summary: This chapter provides an overall overview to the Agri-Park model chapter through: the project background, goals and objectives, the project’s which was developed by the DRDLR. purpose and a demonstration of the project methodology. Key words: Agri-Park model, small-scale/smallholder farmers, FPSU, AH, Key words: concept, smallholder/small-scale farmer, FPSU, AH, RUMC, capital RUMC, production, facilities, information, large-scale/ commercial farmers expenditure Must read if the reader: Must read if the reader: Is not familiar with the Agri-Park’s concept. Does not have a background on the Master Agri-Park Business Plan Seeks to understand the 3 units of the Agri-Park model. Project. Does not know what the goals and objectives of the project are. Is interested in the project process.
Chapter 5: Main Role Players Chapter 4: Location Context Chapter 3: Policy Review
Summary: A list of role-players that are Summary: This chapter provides an overview of the Summary: The important policies that affect the important for the Nkangala Agri-Park Nkangala DM and its features that are important for Nkangala DM Agri-Park are reviewed in this Development are listed in this chapter, along the development of the Agri-Park. chapter and the alignment of the Agri-Park to with potential duties that they may take on. the policy is identified. Key words: Nkangala DM, local municipalities, Key words: government, private, location, economic infrastructure, economic activities Key words: policies, strategies, national, associations, organisations, financial provincial, local, implications, alignment institutions, companies, service providers, Must read if the reader: roles Does not know the location of the Nkangala DM Must read if the reader: Does not know the status of important locational Is not familiar with policies that are Must read if the reader: features of the Nkangala DM. influential to the Nkangala Agri-Parks Is not familiar with the role-players that Does not know the Agri-Hub location and its Programme. are expected be involved with the selection. Is not familiar with the policy implications Nkangala Agri-Park. for the Agri-Park. Is interested in the potential duties to be taken up by the role players
Chapter 7: Agricultural Industry Analysis Chapter 8. 9 & 10: Commodity Summary: In this chapter, an analysis of the District’s agricultural features is provided, as well important Analysis
factors that are influential to agricultural Chapter 6: Economic and Socio- Summary: The three commodities that have development. The three agricultural commodities to been selected to be produced in the initial Economic Analysis be produced in the district’s Agri-Park are identified. phase of the Agri-Park programme are
Summary: This chapter analyses the Key words: agricultural activities, GVA, commodities, individually analysed according to: The market; economic and socio-economic status quo climate, resources, projects, selection criteria, Value chain; Agro-Processing opportunities; of the Nkangala DM through statistics of the prioritisation, top three commodities Stakeholders and service providers; following indicators: demographics, Technology; Socio-economic contributions economic profile, unemployment status, Must read if the reader needs to know: and influences; Emerging/ Potential skills level, income and poverty The current agricultural status of the District. entrepreneurs; and SWOT analysis The status of resources and climate features Must read if the reader: affecting agriculture in the Nkangala DM. Commodities: Beef, Maize and Vegetables Does not know the socio-economic The process of selection used for the three status quo of the Nkangala DM. commodities. Must read if the reader: Does not have knowledge of the effect The three selected commodities. Is interested in the commodities’ market of the socio-economic status quo on trends. the Nkangala Agri-Park development. Is interested commodities’ business enabling features. Needs to know the value chain relations.
Chapter 12: Agri-Park Chapter 13: Implementation Guidelines Organisational Structure
Summary: The implementation guidelines for the Chapter 11: Agri-Park Concept development of the Agri-Park are discussed. Summary: The organisational structure for the Development Agri-Park is demonstrated schematically and
Key words: implementations, guidelines, process explored. Summary: The concepts for the Nkangala Agri-Park recommendations, programmes, action plan, are developed, based on the Agri Park Model, and timeframes Key words: structures, organisational, advisory, a basic capital expenditure is provided.
approval, implementation, monitoring Must read if the reader needs to know: Key words: concept, smallholder/small-scale farmer, The implementation of the Nkangala Agri- Must read if the reader: FPSU, AH, RUMC, capital expenditure Park. Does not know how the Agri-Park is How government programmes are aligned organised. Must read if the reader needs to know: with the Agri-Park. What the concept of the Nkangala Agri-Park is. The recommended action plan and How the 3 units in the Agri-Park model will timeframes. function.
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EXECUTIVE SUMMARY
The Agri-Park concept together with the introduction of an Agri-Park per district municipality is a relatively new concept in South Africa. This document represents the master business plan which will serve as a guiding document in the implementation of the Agri-Park model that was developed by the Department of Rural Development and Land Reform (DRDLR).
Section 1 – Introduction: provides the background information on the Agri-Park concept. It also provides the goals and objectives of the project. Lastly, the section presents the purpose of the master business plan and outlines the various steps that are undertaken in completing the master business plan i.e. the project methodology.
Section 2 – Agri-Park Model: provides an insight into the Agri-Park model. The section provides the definition of the Agri-Park and describes the three basic units within the Agri-Park. All the basic functions together with how the basic units will interact are also described in this section.
Section 3 – Policy Review: in order to achieve its set objectives, the Agri-Park Model seeks to align with some of the key government strategies set out in existing policy frameworks. For this reason, the section three (3) of this document provides an overview of the national, provincial and local policies that will guide the development of the Agri-Park Project. The policy review section provides a background on the relevant policies; identifies key focus areas and targets; and discusses the implications of the policies for the Nkangala District Municipality (NDM) Agri- Park.
Section 4 – Locational Context: in order to establish an Agri-Park in the NDM, it is important to have a good understanding of the strength, weaknesses and the comparative advantages that the district holds. Section 4 therefore describes some of the main features and the major economic infrastructure that are crucial to the development of the Agri-Park in the NDM. The proposed location of the Agri-Hub together with some of the existing infrastructure that can be utilised by the Agri-Park are also described.
Section 5 – Main Role-Players per District: section 5 outlines the main role-players that could potentially be involved in the NDM Agri-Park at varying levels of the development process. The role-players are summarised into three categories such as: Government and Public Sector; Private Companies; and Associations and Organisations.
Section 6 – Economic and Socio-Economic Analysis: The purpose of this Section is to describe the economy of the Nkangala District Municipality in relation to population and economic growth; job creation; and income and poverty level, as viewed against the economic performance of Mpumalanga and South Africa as a whole. A sectoral analysis is also
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provided, setting out the structure of the NDM economy with respect to the different economic sectors and their output and employment contributions to the district’s economy.
Section 7 – Agricultural Industry Analysis: Part of the objectives of the Agri-Park project is to identify three dominant or most feasible commodities within the district. Hence, this section provides an overview of the main agricultural activities occurring in the district, focusing on the types of commodities or products farmed and produced. Part of the purpose of this section is to provide relevant information regarding the current agricultural practices as well as the various opportunities and constraints that the NDM’s Agricultural sector presents. Furthermore, this section identifies the three dominant commodities (Red Meat, Maize and Vegetables) in the NDM, through a thorough prioritisation process that was discussed in details in this section. Products related to the three (3) selected commodities are also briefly discussed during this section.
Section 8, 9 and 10 – Commodity Analysis: This section provides an analysis of the local, global, capital and commodity markets for the three (3) selected commodities. Other major topics covered in this section include: Value chain assessment, Agro-processing opportunities, main inputs suppliers, competitors, stakeholders, technology requirement, the demand and need analysis, job creations opportunities, contribution to food security, regulatory requirements, substitute products and services, barriers to entry, societal and cultural trends and SWOT analysis.
Section 11 – Agri-Park Concept Development: This section describes the Agri-park concept in relation to the three (3) identified commodities (i.e. Red Meat, Maize and Vegetables) in the NDM. The purpose of this section is to align the value chain that has been developed for each commodity with the Agri-Park model.
Section 12 – Organisational Structure: This section will describe the organisational structure of the Agri-Park in the District, in terms of three sub-structures, namely, advisory structures, approval structures and implementation and monitoring structures.
Section 13 – Implementation Guidelines: In this section, the implementation guidelines describe the processes that will be applied in executing the Agri- Park project. The purpose of the implementation guidelines is to provide the relevant stakeholders with a practicable document that will ensure that the project is implemented in an efficient and agreed-on manner, based on the concept spelled-out in the previous chapters. The implementation guidelines cover the areas such as: the implementation process, alignment with government programmes, specific recommendations as well as the roll – out plan.
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Key Role Training Infrastructure/ Location Equipment
The following forms of training would The FPSU will serve the Nine (9) FPSUs were proposed for the be provided at the RUMC: following core functions: NDM Agri-Park, in the following proposed locations: 1. Training of training Emalahleni LM (1) 1. Agricultural input supplies. personnel(s) on how to Steve Tshwete LM (2) The FPSU would require to put in 2. Mechanisation support, disseminate information to place the following major 3. Extension support, Emakhazeni LM (1) the SHF, AH and the FPSU, 4. Local logistics support, Dr JS Moroka LM (2) 2. Market analysis skills, equipment / infrastructure: 5. Primary produce collection, Thembisile Hani LM (2) 3. Supply chain and logistics 6. Through-put to Agri-Hubs, skills, Victor Khanye LM (1) 1. Transport facilities (e.g. 7. limited sorting, packaging, Criteria for selection: 4. Trading techniques (local Bakkie or pick-up storage, and international), 1. Proximity to small scale farmers, vehicles), 8. Some processing for local 5. Agriculture computer 2. Land suitability, 2. Curing shed, markets, programme training. 3. Proximity to the existing farming 3. Sorting facilities, 9. Packaging of products for the Activities, 4. Cleaning, sorting, local market, small retail outlets grading, drying and the fresh produce markets, 4. Existing infrastructure. machines, 10. Transportation of produce 5. Weighing and destined for processing directly FPSU Capital packaging machines, from the farm to the AH, Human 6. Local packhouses, 11. Some marketing and Expenditure 7. Small scale processing distribution, Resources facilities for local 12. Auctioning of produce where The FPSU will provide the following core market, applicable (e.g. auctioning of HR/HR facilities: 8. Produce sorting facility, live animals 1. Agricultural extension officers The estimated capital expenditure for 9. Auction facility, support office, the NDM FPSUs is described as follows: 10. Storage facility,
2. Machine operators/ Local 11. Farming/mechanisation The NDM FPSU Quantity mechanisation centre and equipment required for
workshops, Quantity 9 farming activities. 3. Agronomists, Total cost R275 485 145 4. Researchers,
Key Role Training Infrastructure/ Location Equipment Some of core training activities that would take place within the Agri-Hub include: There would be only one Agri-Hub in the The Agri-Hub will serve the following functions: NDM at the initial phase of the project. It 1. Training of processing staffs on how to handle and operate The AH would require to put in place was proposed by the Province that the Agri- various processing equipment, the following equipment / 1. Training, Hub should be located in Kameelrivier A, in 2. Training on best practices, based 2. Logistics, infrastructure: Dr JS Moroka LM. on changing demand and 3. Agro-Processing/value – addition, supply, 4. Storage/warehousing, 3. Training on new innovations as 1. Administrative facilities, 5. Packaging, they surface, 2. Rental facilities, 6. Product distribution. 4. Processing skills, 3. Agro-Processing facilities, 5. Health and safety training, 4. Feedlots, 6. Management skills. 5. Abattoir,
6. Auction facilities,
7. Packaging facilities, 8. Quality control facilities,
AH 9. Agricultural input
distribution and sales centre, Human 10. Retail facilities, Capital Resources 11. Training centre, Expenditure The AH will provide the following HR: 12. Student and staff housing, The estimated capital expenditure for the 13. Logistics and transport 1. Administrative staff, facilities. 2. Quality control personnel, NDM AH is described as follows:
3. Processing/floor staff, The NDM Agri-Hub Quantity 4. Research and demonstration Quantity 1 personnel, Total Cost R78 209 550 5. Training personnel.
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Key Role Training Infrastructure/ Location Equipment The following forms of training would be The RUMC will serve the It is proposed that there should be one RUMC provided at the RUMC: following function: in the Province which will be strategically 1. Training of the training personnel
located in the Mbombela (in Mbombela LM on how to disseminate 1. Market intelligence, information to the SHF, AH and The RUMC would require to put in 2. Assist farmers, and processors in of the Ehlanzeni District) for the following the FPSU, place the following equipment managing a nexus of contracts, reasons: 2. Market analysis skills, 3. Large warehousing and cold /infrastructure: 3. Supply chain and logistics skills, storage facilities. 1. Mbombela is the economic hub of 4. Trading techniques (local and the Province international), 1. Large warehouses/ holding 2. Has existing infrastructure and is 5. Agriculture computer facilities, also the location of the programme training. 2. Cold storage facilities, Mpumalanga Fresh Produce 3. Administrative facilities/ Market, and information centre, 3. It is linked with major routes and the 4. Customer service desks.
KMIA.
RUMC
Human
Resources
The RUMC will provide the following HR;
1. IT expert/personnel,
2. Administrative manager, 3. Training personnel, 4. Marketing personnel.
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Content
Nkangala DM Master Agri-Park Business Plan Road Map ...... 3
1 Introduction ...... 15
1.1 Introduction ...... 15
1.2 Goals and Objectives ...... 15
1.3 Methodology ...... 16
2 Agri-Park Model ...... 17
3 Policy Review ...... 21
3.1 National Government Policies ...... 21
3.2 Provincial Government Policies ...... 33
3.3 District Policy Review ...... 35
4 Locational Context ...... 37
4.1 District Description ...... 37
4.2 Location of Agri-Park ...... 40
4.3 Economic Infrastructure ...... 41
5 Main Role Players ...... 43
5.1 Government ...... 43
5.2 Organisations and Industry Associations ...... 47
6 Economic and Socio-Economic Analysis ...... 49
6.1 Demographic Analysis ...... 49
6.2 Economic Profile ...... 50
6.3 Employment ...... 51
6.4 Levels of Education ...... 53
6.5 Household Income ...... 54
6.6 Level of Concentration: Tress Index ...... 54
6.7 Comparative Advantage: Location Quotient ...... 55
7 Agriculture Industry Analysis ...... 57
7.1 Sector Analysis ...... 57
7.2 Local Projects ...... 58
7.3 Resource Analysis ...... 59
7.4 Commodity Selection Criteria ...... 62
7.5 Commodity Identification& Prioritisation ...... 64
7.6 Commodity Description ...... 65
7.7 Products ...... 74
8 Commodity Analysis – Beef Cattle ...... 75
8.1 Market Assessment...... 75
8.2 Specific Marketing Channels ...... 78
8.3 Value Chain Assessment...... 80
8.4 Agro-processing opportunities (products) ...... 81
8.5 Technology ...... 83
8.6 Demand and Needs Analysis ...... 89
8.7 Socio-Economic (Job Creation) ...... 90
8.8 Contribution to Food Security ...... 91
8.9 Regulatory Requirements ...... 91
8.10 Substitute Products and Services ...... 95
8.11 Societal and Cultural Trends ...... 95
8.12 SWOT Analysis ...... 97
9 Commodity Analysis – Maize ...... 99
9.1 Market Assessment...... 99
9.2 Value Chain Assessment...... 101
9.3 Agro-Processing ...... 102
9.4 Main Input Suppliers ...... 103
9.5 Competitors ...... 103
9.6 Stakeholders ...... 104
9.7 Technology ...... 105
9.8 Demand and Needs Analysis ...... 110
9.9 Socio-Economic (Job Creation) ...... 111
9.10 Contribution to Food Security ...... 111
9.11 Regulatory Requirements ...... 112
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9.12 Substitute Products and Services ...... 114
9.13 Societal and Cultural Trends ...... 115
9.14 SWOT Analysis ...... 116
10 Commodity Analysis – Vegetables ...... 118
10.1 Local Markets ...... 118
10.2 Value Chain Assessment ...... 122
10.3 Agro-processing ...... 123
10.4 Market Segmentation ...... 123
10.5 Stakeholders ...... 124
10.6 Technology ...... 125
10.7 Demand and Needs Analysis ...... 132
10.8 Socio-Economic (Job Creation) ...... 133
10.9 Contribution to Food Security ...... 134
10.10 Regulatory Requirements ...... 134
10.11 Substitute Products ...... 138
10.12 Societal and Cultural Trends ...... 139
10.13 SWOT Analysis ...... 140
11 Agri-Park Concept Development ...... 142
11.1 Introduction of the Agri-Park Concept ...... 142
11.2 Proposed Development Concepts – Beef ...... 142
11.3 Proposed Development Concept – Maize ...... 147
11.4 Proposed Development Concept – Vegetables ...... 153
11.5 Combined Proposed Development Concept for Nkangala District ...... 158
11.6 Farmer Production Support Units ...... 165
11.7 High-level Costing (CAPEX) ...... 166
11.8 Conclusion ...... 167
12 Organisational Structure ...... 168
12.1 Introduction ...... 168
12.2 Advisory Structures ...... 168
12.3 Approval Structures ...... 169
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12.4 . Implementation and Monitoring Structures ...... 172
13 Implementation Guidelines ...... 174
13.1 Introduction ...... 174
13.2 Implementation Process ...... 174
13.3 Alignment with Government Programmes ...... 176
13.4 Recommendations ...... 180
13.5 Roll-out Plan...... 183
14 References ...... 186
Annexure A – Detailed CAPEX...... 188
Tables Table 2.1: Norms and Standards for Agri-Parks ...... 18 Table 4.1: Nodes ...... 37 Table 4.2: Population Density, 2011 ...... 39 Table 5.1: Main Role Players ...... 43 Table 5.2: Extension services offered by government and private organizations ...... 45 Table 5.3: Government Funding Programmes...... 45 Table 6.1: Population and Household Figures ...... 49 Table 6.2: Nkangala DM Local Economic Growth ...... 50 Table 6.3: Tress Index, 2013 ...... 54 Table 6.4: Location Quotient Interpretation...... 55 Table 6.5: Location Quotient, 2013 ...... 55 Table 7.1: Agriculture Potential of Nkangala DM, 2015 ...... 57 Table 7.2: Farmers to be supported ...... 58 Table 7.3: Registered Projects Aligned to Agri-Parks ...... 58 Table 7.4: DARDLAE Registered Projects ...... 59 Table 7.5: Current Development within Agri-Parks ...... 59 Table 7.6: Dr JS Moroka Agriculture Potential ...... 61 Table 7.7: Commodity Selection Criteria ...... 62 Table 7.8: Weights ...... 63 Table 7.9: Prioritised Commodities ...... 65 Table 7.10: Production Volumes of Vegetable Types, 2010-2014 ...... 70 Table 7.11: Relative Importance ...... 72 Table 7.12: Average Price of Vegetable Types, 2011-2014 ...... 73 Table 7.13: Per capita consumption, 2010-2014 ...... 73
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Table 8.1: Opportunities ...... 79 Table 8.2: Processing Opportunities ...... 81 Table 8.3: Beef Cattle – Stakeholders ...... 82 Table 8.4: Livestock Technologies ...... 83 Table 8.5: Estimated Demand for Beef ...... 90 Table 8.6: Regulatory Requirements ...... 91 Table 8.7: Beef Substitute Products ...... 95 Table 8.8: SWOT Analysis – Beef ...... 97 Table 9.1: Opportunities – Maize ...... 100 Table 9.2: Maize Stakeholders ...... 104 Table 9.3: Technologies – Maize Farming ...... 105 Table 9.4: Estimated Demand for Maize ...... 111 Table 9.5: Regulatory Requirements ...... 112 Table 9.6: Substitutes for Maize Meal ...... 115 Table 9.7: SWOT Analysis ...... 117 Table 10.1: Marketing Channel Opportunities ...... 119 Table 10.2: Vegetables Agro-Processing ...... 123 Table 10.3: Stakeholders - Vegetables ...... 124 Table 10.4: Technologies – Vegetable Farming ...... 125 Table 10.5: Estimated Demand for Vegetables ...... 133 Table 10.6: Polices Affecting the Vegetable Industry ...... 135 Table 10.7: Substitutes for Vegetables ...... 138 Table 10.8: SWOT Analysis – Vegetables ...... 140 Table 11.1: Proposed Development Concept – Beef ...... 143 Table 11.2: Proposed Development Concept – Maize ...... 148 Table 11.3: Proposed Development Concept – Vegetables ...... 153 Table 11.4: Proposed Combined Development Concept ...... 159 Table 11.5: Farmer Production Support Units (Prioritisation) ...... 166 Table 11.6: CAPEX – Agri-Hub ...... 167 Table 11.8: CAPEX – Total ...... 167 Table 12.1: Government Programmes ...... 176 Table 12.4: Development Activities ...... 184
Figures Figure 4.1: Population Distribution, 2014...... 38 Figure 4.2: Sectoral Production Structure, 2013 ...... 39 Figure 6.1: Population Distribution, 2011...... 49 Figure 6.2: Nkangala GVA Contribution, 2013 ...... 50
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Figure 6.3: Sectoral Production Structure, 2013 ...... 51 Figure 6.4: Sectoral Employment, 2013 ...... 52 Figure 6.5: Unemployment Rate ...... 53 Figure 6.6: Average Annual Household Income, 2011 ...... 54 Figure 7.1: Provincial Agriculture GVA ...... 57 Figure 7.2: District GVA ...... 58 Figure 7.3: Provincial Distribution of Cattle, 2014 ...... 66 Figure 7.4: Beef Production and Imports, 2003 – 2014 ...... 66 Figure 7.5: Beef Consumption ...... 67 Figure 7.6: Price of Beef ...... 67 Figure 7.7: Area Planted (Ha) ...... 68 Figure 7.8: Total Production ...... 68 Figure 7.9: Provincial Production, 2014 ...... 69 Figure 7.10: Maize Consumption, 2003-2014 ...... 69 Figure 7.11: Price Index for Maize ...... 70 Figure 7.12: Gross Producer Prices, 2003-2014 ...... 70 Figure 7.13: Total Vegetable Production, 2003-2014 ...... 71 Figure 7.14: Distribution Channels, 2014 ...... 72 Figure 7.15: Volumes and Sale Price ...... 72 Figure 7.16: Per Capita Consumption Trend ...... 74 Figure 12.1: Roll Out Plan...... 184
Diagrams Diagram 2.1: Agri-Park Produce and Information Flows...... 17 Diagram 2.2: Strategic Representation of the Agri-Park model ...... 18 Diagram 7.1: Maize Products ...... 75 Diagram 8.1: Beef Value Chain ...... 80 Diagram 9.1: Maize Value Chain ...... 101 Diagram 10.1: Vegetable Value Chain ...... 122 Diagram 11.1: Proposed Development Concept Summary ...... 167 Diagram 12.1: Agri-Park Organisational Structure ...... 168 Diagram 12.2: Organisational Structure – Monitoring and Implementation ...... 173 Diagram 13.1: Agri-Parks Phase Implementation Approach...... 184
Maps Map 4.1: Nkangala District Agri-Park ...... 41 Map 7.1: Annual Rainfall ...... 60 Map 7.2: Grazing Capacity...... 62
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1 Introduction 1.1 Introduction
Urban-Econ Mbombela has been appointed by the Department of Rural Development and Land Reform to develop a Master Agri-Park Business Plan for Nkangala District.
1.2 Goals and Objectives
The goal of the project is to develop a Master Agri-Park Business Plan that aligns with the
Agri-Park Model that was developed by the Department of Rural Development and Land
Reform and the dominant Commodity Value Chains within the District
The project team understands that the objectives of the project can be summarised as follows:
To understand the Agri-Park Model developed by the DRLDR. To identify the existing agro-processing facilities and farmers within each district municipality and to establish possible linkages. To identify three possible agro-processing business opportunities for each Agri-Park. To develop an institutional/operational plan for each Agri-Park that indicated how existing farmers will be linked with the Agri-park. Review all existing documentation, maps and information. To work with the representative of the districts and the CSIR. SWOT analysis that includes a legal, environmental, financial and technical analysis. Identify current agro-processing initiatives and possible synergies, linkages, and opportunities to buy into existing businesses. Do a financial analysis of the proposed agro-business opportunities. To conduct a feasibility and viability assessment of the proposed agro-processing facilities. Develop an operational plan for the business park. Determine the costing of the Agri-park. The Agri-Park must maximize the use of existing agro-processing, bulk and logistics infrastructure, including the availability of water, energy and roads. The Agri-Park must support growing towns and revitalisation of rural towns in terms of high economic growth, high population growth, and promote rural urban linkages
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1.3 Methodology
Figure 1.1 provides for a methodology illustration of the various steps that are undertaken for the study, these are issue described below in more detail.
Figure 1.1: Methodology
Step 1: Step 2: Policy Step 3: Status Orientation Review Quo
Step 5: Agri-Hub Step 4: Identify Step 6: Feasibility Opportunity existing Assessment Analysis initiatives
Step 7: Financial Step 8: Step 9: Business Analysis Operational Plan Plan
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2 Agri-Park Model
An Agri-Park is an innovative system of agro-production, processing, logistics, marketing and training, and extension services located in District Municipalities. As a network, it enables a market-driven combination and integration of various agricultural activities and rural transformation services.
Diagram 2.1: Agri-Park Produce and Information Flows Agri-Parks
Large-Scale Small-Holder Co- Farmers (LSH) Farmers (SHF) operatives Farmer Production Support LSF will be encouraged 1. SHFs will be encouraged to use the Agri-Park Unit (FPSU) I to use the Agri-Park process established as n P process established as Agri-Hub (AH) r depicted. It is within this depicted. However, f o process that SHF will be due to their existing o d supported over the next u experience and r Rural Urban Market Centre ten years. c product volumes they m (RUMC) e 2. SHF will be able to move may choose to enter the a produce from the FPSU to the RUMC without going Agri-Parks process at the Market ti through the AH, if no AH, RUMC or even go o further Value-adding or packaging is required. directly to the Market. n
The Agri-Park contains three basic units: The Farmer Production The FPSU is a rural outreach unit connected with the Agri-Hub. The FPSU does Support Unit (FPSU) primary collection, some storage, some processing for the local market, and extension services including mechanisation Agri-hub Unit (AH) The AH is a production, equipment hire, processing, packaging, logistics and training (demonstration) unit. The Rural Urban Market The RUMC has three main purposes: Centre Unit (RUMC) Linking and contracting rural, urban and international markets through contracts. Acts as a holding-facility, releasing produce to urban markets based on seasonal trends. Provides market intelligence and information feedback, to the AH and FPSU, using latest Information and communication technologies.
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Diagram 2.2: Strategic Representation of the Agri-Park model
The Diagram above depicts the catchment area of the Agri-Park in the grey circle, essentially illustrating the size and contents of the Park that includes farmers, FPSU’s, AH’s and RUMC’s. The Agri-Hub, or AH, forms the central point of the Agri-Park that is linked to the FPSU’s. There will be more than one FPSU per district which is intended to provide a supporting role between the AH and the farmers. All these components of the Agri-Hub are interlinked, providing a streamlined and integrated approach to agricultural and rural development.
Table 2.1 provides the relevant detail of the catchment of each component.
Table 2.1: Norms and Standards for Agri-Parks Component Proposed catchment area in Proposed catchment area in areas of low density population areas of high density population Farmer Production Support Unit 30km 10km Agri-Hub 120km 60km Rural Urban Market Centre 250km 150km
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To ensure the mobilisation of the Agri-Parks programme the following guiding principles should be followed:
1. One Agri-Park per District (44 nationally, 6 provincially) 2. Agri-Parks must be farmer controlled. 3. Agri-Parks must be the catalyst around which rural industrialization will takes place. 4. Agri-Parks must be supported by government (for 10 years) to ensure economic sustainability. 5. Partnerships between government and private sector stakeholders should be strengthened, ensuring increased access to water, energy, and transport services, and production and develop existing and create new markets to strengthen and expand value-chains. 6. Maximise production of state land with high agricultural potential. 7. Increase and maximise access to markets to all farmers, especially emerging farmers and rural communities. 8. Maximise the use of land with high agricultural potential (i.e. land with high production capability). 9. Maximise use of existing agro-processing, bulk and logistics infrastructure. 10. Revitalise rural towns and provide support to towns with good growth potential, particularly towns with high current or potential economic growth, and high population growth over the past ten years.
However, in order to eliminate the duplication of resources within the Province, there will only be one RUMC in Mpumalanga – the RUMC will be located in Mbombela in the Ehlanzeni District. In addition to Mbombela being economic hub of the Province, it is also the location of the Mpumalanga Fresh Produce Market and is linked to major routes (N4 Maputo Corridor).
The following are the strategic objectives of the Agri-Parks Programme:
Establish Agri-Parks in all of South Africa’s Districts Municipalities that will kick start the Rural Economic Transformation for these rural regions. Promote the growth of the smallholder sector by creating 300 000 new small-scale producers, as well as 145 000 new jobs in the agro-processing industry by the year 2020 (as set out in the National Growth Path). Promote the skills of, and support to, small-holder farmers through the provision of capacity building, mentorship, farm infrastructure, extension services, production inputs and mechanisation inputs. Strengthen existing, and create new, partnerships within all three spheres of
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government, the private sector, and civil society to develop critical economic infrastructure such as roads, energy, water, ICT, and transportation/logistics corridors that support the Agri-park value chain. Enable producer ownership of the majority of Agri-Parks equity (70%), with the state and commercial interests holding minority shares (30%). Allow smallholder producers to take full control of Agri-Parks by steadily decreasing state support over a period of ten years. Bring under-utilised land (especially in Communal Areas Land and land reform farms) into full production over the next few years, and expand irrigated agriculture. Contribute to the achievement of the National Development Plan’s “inclusive rural economy” and target of 1 million jobs created in agriculture sector through creating higher demand for raw agricultural produce, primary and ancillary inputs, as well as generating increased downstream economic activities in the sector.
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3 Policy Review
This section of the business plan provides an overview of the national, provincial, and local policies that will have a direct influence on the development of the Agri-Parks concept in each District Municipality.
3.1 National Government Policies 3.1.1 National Growth Path Government adopted the New Growth Path (NGP) in 2010 as the driver of the country’s job creation strategy. The NGP suggests that in order to achieve growth and transformation of economic imbalances, firm choices and shared determination are required from every structure within the South African society. The goal is to grow employment by five million jobs by 2020; to ensure that half of the working-age population in South Africa will be employed and that unemployment would be reduced from 25% to 15%. The NGP is also formulated to reduce inequality and eliminate rural poverty by identifying areas where long term structural and feasible changes can be made.
STRATEGIC PRIORITIES / FOCUS AREAS The strategic focus of the NGP is to support employment creation. Efforts will be prioritised in key sectors such as infrastructure, the agricultural value chain, the mining value chain, green economy manufacturing, tourism, and certain high- level services. To achieve these objectives, the framework seeks to:
Identify areas that have potential for large scale employment creation.
Develop a policy package to facilitate employment creation in the areas identified.
Create a consensus on the new local and global opportunities, and see how these opportunities can be seized in order to achieve socially desirable and sustainable outcomes.
Strengthen the domestic and regional agricultural markets by supporting smallholder farmers.
Broaden the markets for South African goods and services through a stronger focus on exports.
Provide quality basic and secondary education.
Invest in health including effective measures to address HIV/AIDS.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The agricultural value chain has been prioritised to play an important role in the provision of job opportunities and improve the standard of living of farm workers. The NGP targets opportunities for 300,000 households in agricultural smallholder schemes, plus 145,000 jobs in agro-processing by 2020, while there is potential to upgrade conditions for 660,000 farm-
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workers. It can be concluded that the NGP supports the development of the Agri-Parks.
3.1.2 National Development Plan – 2030 (2010) South Africa’s first National Planning Commission was set by President Jacob Zuma and inaugurated in May 2010. The objective posed to the National Planning Commission was to take an independent view of South Africa, and from that, derive a Vision and a Plan that is focused on enabling a much better quality of life for all South Africans by 2030. The primary channels through which improvement in quality of life are likely to come about, are through eliminating poverty and reducing inequality - the two single biggest problems in South Africa. These aspects affect every other aspect of development and every aspect of life for the citizens of this country. As both a cause and result of these primary problems, the NDP has identified nine specific and predominant challenges: 1. Too few people work. 2. The quality of school education for black people is poor. 3. Infrastructure is poorly located, inadequate, and under-maintained. 4. Spatial divides hobble inclusive development. 5. The economy is unsustainably resource-intensive. 6. The public health system cannot meet demand or sustain quality. 7. Public services are uneven and often of poor quality. 8. Corruption levels are high. 9. South Africa remains a divided society.
STRATEGIC PRIORITIES / FOCUS AREAS The three broad frameworks identified to ensure the proposed vision set out by the NDP is achieved are the following: 1. Raising employment through faster economic growth. 2. Improving the quality of education, skills development, and innovation. 3. Building the capability of the state to play a developmental, transformative role.
Given the complexity of national development, the plan sets out six interlinked priorities by which the main challenges will be addressed:
Uniting all South Africans around a common programme to achieve prosperity and equity.
Promoting active citizenry to strengthen development, democracy, and accountability.
Bringing about faster economic growth.
Higher investment and greater labour absorption, focusing on key capabilities of people and the state.
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Building a capable and development state.
Encouraging strong leadership throughout society to work together to solve problems.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The National Development Plan views agriculture as critical to employment and food security. It is estimated that Agriculture would potentially create a million jobs by 2030. Agri- Parks will serve as important mechanisms to execute the NDP’s proposed rural development strategy due to their potential for supporting small-scale agricultural production and stimulating agro-processing in rural areas.
One core element of this approach is conducting commodity and value-chain analyses and mapping exercises to determine the best areas to establish Agri-Parks based on the growth potential of value-adding commodities. As such, each Agri-Park will focus on specific prioritised commodities that have the highest prospect of succeeding in their region. This is directly in line with the NDP’s approach of targeting high value commodities (most of which are labour intensive) to stimulate industrial growth, accompanied by measures that ensure sustainable production on redistributed land and an improved institutional support system.
In this regard, the NDP identifies certain agricultural sub-sectors that have the most potential for development, which are categorised into large labour-intensive industries, smaller labour-intensive industries, and large existing industries with significant value-chain linkages. For instance, small-scale labour intensive agriculture, including macadamia, pecan nut, rooibos tea, olive, fig, cherry, and berry industries, are found to have the greatest expansion potential due to the significant market demand for these products. The NDP projects that approximately 80 000 jobs can be created by further developing these particular areas of small-scale agriculture. By providing the necessary inputs, facilities, institutions, market- linkages, and partnerships, Agri-Parks can enable small-scale producers and rural residents to create new, and expand existing enterprises in these industries, which will have positive growth impacts on the rural economy. The NDP states that in South Africa a highly centralised, vertically integrated agro-processing sector already exists for staple foods such as maize, wheat, sugar, sunflower oil, tea, flour, peanut butter, cigarettes, beer, fruit juices, and canned goods. Key proposals identified for the agriculture and agro-processing sectors include the following:
Greater investment in providing innovative market linkages for small-scale farmers in communal and land-reform areas.
As part of a comprehensive support package for farmers, preferential procurement mechanisms should be put in place to ensure that new agricultural entrants can also access these markets.
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Growth in agricultural production has always been fuelled by technology, and the returns to investment in agricultural research and development are high. Technology development should therefore, be prioritised.
Policy measures to increase intake of fruits and vegetables, and reduce intake of saturated fats, sugar and salt, as recommended in the South African food dietary guidelines, to accompany strategies to increase vegetable and fruit production.
3.1.3 Industrial Policy Action Plan (IPAP)-2013/14 – 2015/16 The Industrial Policy Action Plan (IPAP) 2013/14-2015/16 is in the fifth iteration of IPAP and the apex policy document of the Department of Trade and Industry (DTI). It is drawn from a range of visions set out by successive industrial policies such as the NDP, NGP, and National Industrial Policy Framework (NIPF). The IPAP sets out an industrial policy framework with overriding interventions that will prevent industrial decline and support growth, as well as diversifications of South Africa’s manufacturing sectors. IPAP will ultimately lead to a restructured economy with more value-adding, labour intensive, and environmentally sustainable industrial activities.
STRATEGIC PRIORITIES / FOCUS AREAS IPAP focuses on building on, and fulfilling, the plans set out in IPAP 2012/2013 in its transversal and sector-specific interventions. These transversal interventions are in the areas of:
Public procurement
Competition policy
Innovation and technology
Skills for the economy
Industrial financing
Developmental trade policy
Regional integration
Special economic zones
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT IPAP identifies the agro-processing industry as a sector with potential to spur growth and create jobs, because of its strong backward linkage with the primary agricultural sector. The agriculture and agro-processing value chain represents an important source of labour intensive growth. In addition, this value chain is central to the rural development and smallholder farmer development objectives of government.
The key-programmes identified for agro-processing within the IPAP are the following: 1. Development of a Food-processing Strategy and Action Plan with the objective of accelerated growth in the food-processing sector. 2. Development of a small-scale milling industry to enable small-scale maize milling
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enterprises to produce for local markets at competitive prices. 3. Enhancement of competition in the fruit and vegetable canning industry - The creation of a sustainable platform for the long-term growth and competitiveness of the industry. 4. Development of a Soybean Action Plan promoting market linkages between primary agricultural producers and processors. 5. Development of the organic food sector – The development of a competitive organic sub-sector producing high-quality food products for both local and export markets. 6. Supporting the Public-Private Partnership (PPP) for Food Security – Entails smallholder farmer access to formal retail chains, Government procurement, and small scale processing opportunities. With infrastructure investment as one of its main components, upon which all other proposed actions rest, the Agri-Park Programme is key in advancing the objectives of IPAP. The Agri- Parks Programme will further promote an approach to land reform and rural development consisting of comprehensive spatial planning, appropriate categorisation of land and beneficiaries to ensure sustained agricultural development, associated/targeted skills development, employment creation, significant infrastructural expansion, improved public service delivery, more dedicated investment in agriculture through a targeted approach, and the increased involvement of the private sector in land reform and rural development initiatives.
3.1.4 Agricultural Policy Action Plan (APAP) (2015-2019) The Agricultural Policy Action Plan (APAP) (2015-2019) aligns itself to other existing national plans such as the NGP, NDP, and the IPAP. These plans were geared towards providing decent employment through inclusive growth, rural development, food security/ protection, as well as enhancement of environmental assets and rural resources; with key job drivers identified as agriculture, infrastructure, mining, manufacturing, tourism, and the green economy. The APAP sets an action plan for a five-year period (2015-2019), and seeks to translate the high-level responses offered in the Integrated Growth and Development Plan (IGDP) into tangible, concrete steps.
STRATEGIC PRIORITIES / FOCUS AREAS The APAP seeks to provide both a long-term vision, and focused interventions in a 5-year rolling schedule, to be updated annually. APAP is based on Sectoral Key Action Programmes (commodities) and Transversal Key Action Programmes (e.g. research and innovation). It furthermore, presents institutional arrangements and processes for achieving this objective – especially to integrate planning, M&E between DRDLR and DAFF across 3 spheres of government. The APAP has 4 policy levers which are: 1. Equity and Transformation:
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Ensuring a more producer-friendly (and consumer-friendly) market structure
Accelerating implementation of the Charters and the Small-scale fisheries policy;
Promoting local food economies; and
Investment in agro-logistics 2. Equitable Growth and Competitiveness: Promoting import substitution and export expansion through concerted value chain/commodity strategies;
Reducing dependence on industrial and imported inputs;
Increasing productive use of fallow land; and
Strengthening R&D outcomes. 3. Ecological Sustainability: Climate Smart Agriculture 4. Governance: Support services;
Skills development;
Research and development;
Knowledge and information management (integrated spatial economic planning);
Market access, information and regulation; and
Institutional arrangements
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The evaluating measurements used within the APAP to meet its short- and medium-term in objectives are the following: 1. Contribution to food and security 2. Job creation 3. Value of production 4. Potential contribution to trade balance The APAP informs the Agri-Parks Business Plan through the identification of the following specific sub-sectors for key action programmes: 1. Poultry/Soybeans/Maize Integrated Value Chain 2. Red meat value chain 3. Wheat value chain 4. Fruits and vegetables 5. Wine industry 6. Forestry 7. Small scale fisheries The developments of Agri-parks are in line with the APAP policy levers and would help in achieving its set out goals.
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3.1.5 Department of Agriculture, Forestry and Fisheries Agro-processing Strategy (2012) The Department of Agriculture, Forestry and Fisheries’ (DAFF) Agro-Processing Strategy was developed to create a strategic direction on agro-processing for both national and provincial government. The strategy seeks to provide a response on the agro-processing job creation and related government priority targets set out in existing policy frameworks such as the NGP and IPAP.
STRATEGIC PRIORITIES / FOCUS AREAS The strategic objective is to articulate how government should intervene to support and develop Small and Medium Enterprises (SMEs), agro-processing in the local and global agricultural sector, as well as forestry and fisheries value chains. The following strategic interventions are set out by this strategy: 1. Facilitate access to incentives and support packages 2. Facilitate access to infrastructure 3. Promote value chain linkages 4. Support technical and managerial training 5. Facilitate access to appropriate technology 6. Facilitate access to business development services The implementation of this strategy is to be aligned with the implementation of the Smallholder Development Programme, the Zero Hunger Plan, and the Marketing Strategy of the DAFF to realise its intended objectives.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT Developing and supporting the currently underserviced agro-processing SME has been identified as key to achieving government’s priority targets of promoting job creation, economic growth, and equity. The findings of the Department of Agriculture, Forestry and Fisheries Agro-processing Strategy forms a vital input in formulating the Agri-parks Master Business Plans due to the scope of agro-processing in the national economy.
3.1.6 Strategic Plan for the Department of Agriculture, Forestry and Fisheries (2013/14 – 2017/18) The Strategic Plan for the DAFF was guided by other key policies such as NGP, NDP, IPAP and the work of the Presidential Infrastructure Coordinating Commission (PICC); aimed at tackling the challenges of poverty, inequality, and unemployment. The Strategic Plan for the DAFF sets out programmes of action and projects for a period of five years (2013/14 – 2017/18), and is formulated to improve and develop production by means of entrepreneurship promotion in the AFF sectors.
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STRATEGIC PRIORITIES / FOCUS AREAS The Strategic Plan of the DAFF aims to address the social and economic challenges that the AFF sectors are faced with. It further sets new opportunities for service delivery with relation to job creation, food security, rural development, and skills development. The opportunities or action areas highlighted for key policy development include the following:
Food security production programmes
Strategic plans for supporting small producers
Aquaculture programmes
Agro-processing strategic frameworks
The strategic goals set out in the document are the following:
Increased profitable production of food, fibre, and timber products by all categories of producers.
Sustained management of natural resources.
Effective national regulatory services and risk management systems.
A transformed and united sector.
Increased contribution of the sector to economic growth and development.
Effective and efficient governance.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The Strategic Plan of the DAFF supports the development of the Agri-parks development. Agro-processing is highlighted to play a key role in ensuring an equitable food-secure economy. Interventions should focus on developing processed agricultural products, while at the same time targeting increased export-trade. Investment in agro-processing should be increased as a means of reinvigorating specific strategic value chains such as soya beans, rooibos, beverages, fruit and vegetables, as well as forestry. An equitable food-security economy will improve access to markets, especially for smallholder farmers.
3.1.7 National Policy Framework on the Development of Small and Medium Agro-Processing Enterprise in the Republic of South Africa The National Policy Framework on the Development of Small and Medium Agro-Processing Enterprise in the Republic of South Africa was initiated by the DAFF.
STRATEGIC PRIORITIES / FOCUS AREAS The objectives of this document are the following:
Rural industrialisation through the establishment of agro-processing industries that are closer to production areas.
Local economic growth through increased trade in rural areas.
Job creation through the establishment of SME agro-processors to improve livelihoods
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of both smallholder agro-processors and producers. However, the specific challenge that this policy aims to address is the limited active participation of rural-based SMEs agro-processors in the agro-processing mainstream value chain. The strategic objective is to create a profitable, competitive and thriving small and medium agro-processing industry. To achieve this, the policy seeks to:
Provide entrepreneurial support to small and medium agro-processors.
Support enterprise development through facilitating access to markets, finance, incubation, and mentorship.
Facilitate agro-processing industry research and technology transfers.
Facilitate infrastructure investment specifically within rural areas.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The major constraints to developing the thriving agro-processing value chain identified in the framework are lack of appropriate technology, inadequate infrastructure, access to finance, and low levels of technical and entrepreneurial skills. The Agri-Parks developments will focus on providing continuous support to small and medium scale agro-processing enterprises. Continuous support will assist in increasing the number of enterprises and address the challenges they face with integrating and actively participating in the mainstream economy.
3.1.8 Strategy for the Development of Small and Medium Agro-Processing Enterprises in the Republic of South Africa (2014 – 2019) The Strategy for the Development of Small and Medium Agro-processing Enterprises in the Republic of South Africa was developed to support increased participation of small and medium scale agro-processing enterprises in the agro-processing sector. The strategy aims to support the vision of the DAFF, which aligns with the NDP and IPAP, while linking directly to the outcomes of the Medium Term Strategic Framework (MTSF, 2009).
STRATEGIC PRIORITIES / FOCUS AREAS The strategy seeks to articulate how the small and medium agro-processing enterprises within the agriculture, forestry and fisheries sector in South Africa can be supported and developed at all levels of government (national, provincial, and local)
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IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The Strategy for the Development of Small and Medium Agro-processing Enterprises in the Republic of South Africa informs the Agri-parks Master Business Plan through identifying the following four intervention pillars needed to for the development of Small and Medium Agro- processing Enterprises: 1. Entrepreneurial support 2. Enterprise development (Access to finance, market access and incubation) 3. Industry research and technology transfer 4. Infrastructure investment
3.1.9 Agriculture, Forestry and Fisheries: Integrated Growth and Development Plan 2012 The Integrated Growth and Development Plan (IGDP) was developed for the Medium Term Expenditure Framework (MTEF) (2011/12 – 2014/15) with the aim of providing a long-term strategy for the growth and development of the agricultural, forestry and fisheries sector in South Africa. The IGDP seeks to address the current realities and challenges that these sectors face, and to develop a common vision that will ensure equitability, productivity, competitiveness, and sustainability.
STRATEGIC PRIORITIES / FOCUS AREAS The strategic priorities of the IGDP for the agricultural, forestry, and fisheries sector are the following:
Attaining equity and transformation
Equitable growth and competitiveness
Environmental sustainability
Good governance
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The IGDP identifies that in terms of agro-processing, there is a need to support South African exporters to position their products better in fast-growing, developing country destinations and Africa. This may require focused export intelligence and marketing support, as well as intergovernmental assistance to ensure that South African products are not unfairly subject to nontariff barriers. Greater emphasis and investment is required in the understanding and managing of international trade standards and regulations, especially in the areas of food safety and sanitary and phytosanitary measures.
3.1.10 Department of Rural Development and Land Reform: Comprehensive Rural Development Programme The Comprehensive Rural Development Programme (CRDP) is aimed at being an effective response against poverty and food insecurity through maximising the use and management
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of natural resources to create vibrant, equitable, and sustainable rural communities. A CRDP must improve the standards of living and welfare, but also rectify past injustices through rights- based interventions and address skewed patterns of distribution and ownership of wealth and assets. The strategic objective of the CRDP is therefore, to facilitate integrated development and social cohesion through participatory approaches in partnership with all sectors of society. This document therefore, serves as the policy framework document for the Comprehensive Rural Development Programme - or 'CRDP'. The document thus, aims to set out the programme principles.
STRATEGIC PRIORITIES / FOCUS AREAS The vision of the CRDP is to create vibrant, equitable, and sustainable rural communities include: contributing to the redistribution of 30% of the country’s agricultural land; improving food security of the rural poor; creation of business opportunities, de-congesting and rehabilitation of over-crowded former homeland areas; and expanding opportunities for women, youth, people with disabilities, and older persons who stay in rural areas.
The ultimate vision of creating vibrant, equitable, and sustainable rural communities will be achieved through a three-pronged strategy. The components of this three-pronged strategy are also the key elements that characterise the CRDP and are as follows:
Coordinated and integrated broad-based agrarian transformation,
Strategically increasing rural development,
Improved land reform.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The types of priorities that are typically catered for in the CRDP, categorised according to the three key strategies mentioned above, include – but are not limited to – the following:
A. Economic Development Agrarian Transformation
Livestock farming and related value chain development (exploring all possible species for food & economic activity).
Cropping and related value chain development (exploring all possible species, especially indigenous plants for food and economic activity). Rural Development
The establishment of business initiatives, agro-industries, cooperatives, cultural initiatives, and vibrant local markets in rural settings.
B. Social Development Rural Development
The empowerment of rural communities, especially women and the youth, through
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facilitating and mediating strong organisational and institutional capabilities and abilities to take full charge of their collective destiny.
Capacity building initiatives, where rural communities are trained in technical skills, combining them with indigenous knowledge to mitigate community vulnerability to, especially, climate change, soil erosion, adverse weather conditions and natural disasters, hunger and food insecurity.
C. Physical and Infrastructure Development Rural Development
Revitalisation and revamping of old, and the creation of new economic, social, and information communication infrastructure and public amenities and facilities in villages and small rural towns.
D. Institutional Development Land Reform
Projects will be linked to the acquisition of, and access to, land through the three land reform programmes (redistribution, tenure, and restitution). All projects implemented through the three programmes will be implemented efficiently but in a sustainable manner linked to the strategic objective of the CRDP.
3.1.11 Department of Agriculture, Forestry and Fisheries
1. COMPREHENSIVE AGRICULTURE SUPPORT PROGRAMME (CASP) To ensure the commercial viability of emerging farmers from a household food security level to a commercial level, a farmer-to‐ farmer mentorship policy has been developed. The department regards skills development as one of its critical focus areas and this obviously includes providing hands-on training to emergent farmers in various fields of farm management.
2. MICRO‐ AGRICULTURAL FINANCIAL INSTITUTIONS OF SOUTH AFRICA (Mafisa) The Micro‐ Agricultural Financial Institutions of South Africa (Mafisa) encourage partnerships between established agricultural enterprises and emerging farmers and entrepreneurs by providing access to finance for farmers, especially beneficiaries of the land restitution, redistribution, and land tenure reform programmes. The Land Bank administers the credit scheme on behalf of the department and provincial departments provide assistance to access the scheme. Four development finance institutions are currently participating in the disbursement of Mafisa funds in the provinces.
3. ILIMA-LETSEMA The grant provides for farmers who lack access to credit to be assisted to access agricultural production inputs. The inputs are necessary to increase agricultural production and hence,
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to improve household and national food security. Jobs are sustained and new ones created when farm enterprises are made operational, and this requires provision of the production inputs
4. AGRICULTURAL BROAD-BASED BLACK ECONOMIC EMPOWERMENT (AgriBEE) The AgriBEE Charter seeks to provide direction on the integration of emerging participants into mainstream agriculture by creating linkages, partnerships, and networks for balanced, mutually benefiting results for all concerned. It specifically encourages partnerships between established agricultural enterprises and emerging farmers and entrepreneurs. It seeks to ensure enhanced competitiveness and sustainable development with improvement/expansion of the existing businesses, rehabilitation of ailing agricultural business concerns, and expanded entry for new businesses in the sector.
3.2 Provincial Government Policies 3.2.1 Mpumalanga Spatial Development Framework Spatial Development Framework (SDF) is a planning tool informed by the international, regional and national initiatives and legislations. The purpose of the SDF is to strategically plan the implementation of development projects in the province.
STRATEGIC PRIORITIES / FOCUS AREAS The framework identifies the economic sector growth strategies in agriculture as follows: The exploitation of competitive advantage in agricultural and forestry sector within Msukaligwa LM, Mkhondo LM, Dr Pixley Ka Isaka Seme LM, Dipaleseng LM, Victor Khanye LM, Emakhazeni LM, Umjindi LM and Nkomazi LM. The roll-out of the Comprehensive Rural Development Programme must assist in expanding agriculture potential to ensure food security and provide for agro- processing The application of new sources of water for irrigation and water technology to provide sustainable agricultural products for agro-processing and commercial farming
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The challenge of new sources of water will impact Agro-Parks in commercial crop farming and agro-processing. Agro-processing systems will need factor the shortage of water and develop water saving processes. Research in Agri-Parks will need to factor such challenge and come up will innovative and water-saving processes. 3.2.2 Mpumalanga Economic Growth and Development Path (2011) Mpumalanga Economic Growth and Development Path (MEGDP) illustrate economic landscape of Mpumalanga with a view of future economic growth and development. The
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MEGDP correlates with the National Growth Path in identifying job drivers and economic sectors with the potential to generate high employment. The provincial plan takes into consideration province-specific comparative and competitive advantages and the linkages to key provincial strategic objectives.
STRATEGIC PRIORITIES / FOCUS AREAS Key objective of MEGDP is to promote economic growth that creates jobs and reduce poverty and inequality in Mpumalanga. Key sectors that promote job creation were identified, which included agriculture among other priority sectors. Interventions to facilitate growth and job creation in the Province are identified as: Infrastructure development: pack houses, dams, silos, agro-processing infrastructure Skills development Support to small-scale farmers and agri-businesses Fast-track the settlement of outstanding land claims
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The interventions needed by the Province to develop skills and support small-scale farmers will be provided by the Agri-Park. The Agri-Park objectives is fulfilling the provincial plan of supporting small-scale farmers and develop infrastructure in the agricultural sector.
3.2.3 Mpumalanga Vision 2030: Strategic Implementation Framework The provincial vision sets specific targets that are required to develop the province using the long-term approach. Specific targets are in line with a number of factors that influence such targeted development. The vision is aligned with the National Development Plan
STRATEGIC PRIORITIES / FOCUS AREAS The province has identified employment and education as top two critical needs for the long term development of the province. Mpumalanga has then set the following targets for development: Economy and employment priorities: Specific targets are set for increased employment and GDP growth for year 2030 Education, training and innovations: The province has targeted to improve the pass rate to 80% in 2030 Create an effective social welfare system Improve health care system
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT Objective of creating sustainable employment and offer relevant training in agricultural activities serves priority of employment while increasing production and provincial economy of Mpumalanga
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3.3 District Policy Review 3.3.1 Nkangala Spatial Development Framework Nkangala District SDF is planned to align with the district Integral Development Plan (IDP) and all National and Provincial plans. The purpose of the document is to facilitate the implementation of the IDP
STRATEGIC PRIORITIES / FOCUS AREAS Nkangala District Municipality SDF objectives are as follows:
To provide a strategic, indicative and flexible forward planning instrument to guide decisions on land development; To provide a set of policies, principles and directives for spatial development; To provide a clear and logical framework for private and public sector investment; To promote sustainable development in terms of natural and built environment conservation; To facilitate the social, economic and environmental sustainability of the Nkangala DM area; To provide a framework for dealing with key issues such as natural resource management, land reform, and land use management; To facilitate the development of an aesthetical urban and rural landscape; Ensuring consistency in level of detail, general contents, development philosophy, as well as horizontal and vertical integration between the Local SDF’s, and the District SDF.
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT The Agri-Park key goal of transforming rural areas and create linkages between municipalities will ensure that Nkangala DM plans to develop rural areas is ensured. The project goal to support agricultural sector for at least 10 years means that long term impact and sustainable job crating will be evident. The project has a good chance of being a success in the long-run when government municipalities work in partnership with a number of stakeholders to nurture and properly guide the management of the project. This plan clearly indicates that he success of the project lies in good relationship between government and private sector to stir the project in the good direction.
3.3.2 Nkangala District Integral Development Plan Review (IDP) Integral Development Plan (IDP) is an approach to planning that identifies the best solution to long-term development. The IDP outlines the projects and programmes that municipality has well thought out in order to bring about development for the people on the District. The Plan is aimed at aligning with the National Development Plan and other key strategic planning tools
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such as Millennium Development Goals
STRATEGIC PRIORITIES / FOCUS AREAS When IDP was compiled, communities were consulted and a number of concerns were raised by communities including the following: Lack of basic service provision in rural areas and the slow process of transferring land to communities High level of unemployment, non-prioritization of local people when employment opportunities arise Shortage of ploughing equipment, lac of agricultural assistance aimed at subsistence farmers and monitoring of ineffectiveness of the tractors provided
IMPLICATIONS FOR THE AGRI-PARKS DEVELOPMENT Agri-Parks establishments aim at supporting agricultural sector and empower activities in this sector. Support to small-scale farmers and arising businesses in the value chain will motivate local people. Priority will be given to local people in job creation.
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4 Locational Context 4.1 District Description Nkangala District is the northern District of Mpumalanga, with Limpopo in the north, and Gauteng in the east. The District covers and estimated 1 675 825 hectares of land. The District is predominately rural, comprising of extensive farming, nature reserves and mining areas. Source: Urban-Econ GIS Unit, 2015
Nkangala District is divided into 6 local municipalities (LMs) namely: Dr JS Moroka LM Thembisile Hani LM Victor Khanye LM Emalahleni LM Steve Tshwete LM Emakhazeni LM
Table 3.1 indicates the primary, secondary, tertiary and fourth order nodes of the District.
Table 4.1: Nodes Primary Node Secondary Node Tertiary Node Fourth Order Emalahleni Kwamhlanga Rietkuil Coalville Middelburg Siyabuswa Vandyksdrift Marapyane Belfast Masobe Sundra Ogies Verena Balmoral Delmas Entokozweni Dullstroom Kriel Emgwenya Bamokgoko Stofberg (Source: Mpumalanga SDF, 2013)
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4.1.1 Transport Routes The main transport routes within the District include: The N4 (Maputo Corridor) and the N12 that traverses the District from east to west linking Gauteng to Mbombela and Mozambique. These two roads also link the nodal areas of the District (Delmas, Emalahleni, Middelburg and Emakhazeni). The R540 provides a valuable linkage to popular tourist attractions in the Province such as Dullstroom, Pilgrim’s Rest, Graskop and Hoedspruit. There is also a railway running parallel to this road up to Mashishing The N11 runs from Middelburg to the south connecting nodal areas such as Ermelo, Volkstrust and the Free State Province to nodal areas in the Limpopo Province (Groblersdal, Polokwane and Marble Hall) The R541 runs from Emakhazeni to the Oshoek border of Swaziland The Moloto Road (R573) is a public transport and freight route between Gauteng and Marble Hall. The Midleni Corridor refers to a section of the R555 which links Middelburg to Emalahleni
4.1.2 Settlement Patterns There are an estimated 1.3 million people residing in Nkangala District (Census 2011) of which the majority (395 464) reside in Emalahleni LM, this is likely due to the mining sector and its many employment opportunities.
Figure 4.1: Population Distribution, 2014 The Figure indicates the 100% population of the municipalities 90% 80% of Nkangala District in terms of 70% their location. The majority of 60% 70% 50% 93% the population in Victor 95% 89% 40% 78% 79% Khanye LM, Emalahleni LM, 30% 20% Steve Tshwete LM and 10% Emakhazeni LM live in urban 0% areas whereas the majority of the population in Thembisile Hani LM and Dr JS Moroka LM reside in traditional areas. Urban Area Traditional Area Farm
Source: Census 2011
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The Table indicates the population density of Table 4.2: Population Density, 2011 Local Municipality People per Km2 the District (people per square kilometre); Victor Khanye LM 48 even though the majority of the population Emalahleni LM 148 of Dr JS Moroka LM reside in a traditional Steve Tshwete LM 58 area, this municipality has the highest Emakhazeni LM 10 population density. It is evident from this Thembisile Hani LM 130 Table that Emakhazeni LM is very sparsely Dr JS Moroka LM 176 populated. Source: Census 2011
4.1.3 Main Economic Activities The Figure below illustrates the production structure for each of the sectors in the local municipalities of Nkangala District.
Figure 4.2: Sectoral Production Structure, 2013 50% 40% 30% 20% 10% 0%
Victor Khanye Emalahleni Steve Tshwete Emakhazeni Thembisile Hani Dr JS Moroka
Source: IHS Global Insight Regional Explorer, 2013
The main economic activities of the District include: mining, agriculture, manufacturing (industrial) and tourism (in specific areas).
Mining: The commodity that is primary mined in the District is coal which is used by Eskom, who has a number of power stations in the District. Coal mining occurs in the central areas of the District (Victor Khanye LM, Emalahleni LM and Steve Tshwete LM). Other minerals are also located to the east in Emakhazeni LM and there is an increase in mining applications outside
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the main coal mining areas.
Agriculture: Major crop and livestock farming areas coincide with the major mining areas. Some forestry activities occur in the east of the District while there is a substantial number of subsistence farmers in Dr JS Moroka LM and Thembisile Hani LM.
Industrial/Manufacturing: The industrial activities within the District are closely related to the local mining industry. Middelburg is known as the ‘home of stainless steel’ and is the location of industry role players such as Columbus Steel.
Tourism: The two major tourism nodes within the District are in the area of Loskop Dam in the north where there are other nature reserves such as the Mkhombo Nature Reserve and Mdala Nature Reserve, and the area in the east where Dullstroom, Emgwenya and Entokozeni is located. This area is also known as the ‘trout triangle’ where fly-fishing is a popular tourist activity.
4.2 Location of Agri-Park The Agri-Park for Nkangala will be located in Kameelpoort A in the Dr JS Moroka LM as seen in the Map below. The Agri-Park will be situated on the R568 between Gauteng to Marble Hall in the Limpopo Province. From the Map it is evident that there are a number of Animal and Veld Management Programme (AVMP) farms in the surrounding area as well as Comprehensive Agriculture Support Programme initiatives and social relief projects.
The selection criteria for determining locations of the agri-hub include the following elements: 1. Existing Land Capability 2. Existing Agricultural infrastructure (e.g. silos, abattoirs, millers, ginners, food processors, fresh produce, etc.) 3. Proximity to potentially vacant state land parcels 4. Proximity to water sources (dams, rivers, reservoirs) 5. Proximity to CASP, Ilima-Letsema, PLAS, Restitution claims, recapitalisation projects 6. Identification of enterprise areas (DAFF 1936) e.g. cattle, sheep, maize 7. Proximity to social relief projects 8. Proximity to EDD gateways 9. Existing Road and Rail connectivity 10. Proximity to retail markets (SPAR, Pick N Pay food stores) 11. Proximity to PIMD poorest wards 12. Proximity to Land Care projects
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13. Proximity to rural towns 14. Proximity to AVMP farms 15. Proximity to existing CRDP wards
Map 4.1: Nkangala District Agri-Park
Source: Department of Rural Development and Land Reform, 2015
4.3 Economic Infrastructure 4.3.1 Roads The main roads within the District are tarred, although the large amount of trucks transporting coal throughout the District has detrimental effects on road surfaces. All major towns and nodes are well connected and there are a number of gravel roads connecting settlements in the northern areas of the District.
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4.3.2 Electricity Electricity supply is critically important to the farming of some agricultural products and essential to all agro-processing activities. Most areas within major centres in the District are able to be electrified relatively easy. Farms situated in rural areas may require significant electricity infrastructure investments.
4.3.3 Telecommunication The majority of people in this District does not have a landline (approximately 84%), however, 92% of people in the District do have a cell phone. Emalahleni LM (Emalahleni) and Steve Tshwete LM (Middelburg) are to the two local municipalities with the highest amount of people with land lines, 10% and 12.9% respectively as well as the highest amount of people with cell phones (93.4% and 94% respectively). The majority of people within Nkangala District also do not have access to the internet (65.9%). The people who do have access to the internet access it from their cell phone (18.1%). Only 5.9% of the people in the District can access the internet at home.
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5 Main Role Players
Extension services would play a pivotal role in providing support services to both the Agri-Hub (AH) and Agri-Park (AP). This section focuses on the main role players that will contribute to the overall development of the Nkangala District.
Table 5.1: Main Role Players Government Organisations and Associations Department of Rural Development and Land Red Meat Industry Forum Reform (DRDLR) Red Meat Producers Organisation Mpumalanga Department of Agriculture, Emerging Farmers Rural Development, Land and Environmental South African National Halaal Authority Affairs (DARDLEA) (SANHA) Nkangala District Municipality South African Feedlot Association (SAFA) National Development Agency (NDA) National Emergent Red Meat Producers Department of Trade and Industry Organisation (NERMPO) Small Enterprise Development Agency (SEDA) National African Farmers Union (NAFU) Local Municipalities (LM) BKB Department of Agriculture, Forestry and African Farmers Association of South Africa Fisheries (DAFF) (AFASA) Mpumalanga Economic Growth Agency AgriMega (MEGA) Women in Agriculture (WARD) Red Meat Abattoir Association (REMA) Agriculture Resource Council (ARC)
Other potential role players include financial institutions such as First National Bank, Standard Bank Agriculture, ABSA Agribusiness and Land Bank as well as training institutions such as the University of Mpumalanga and AgriSETA.
Industry role players are discussed in detail on subsequent sections.
5.1 Government Government role in the industry to ensure that Agri-Parks are a successful intervention involves a number of responsibilities such as: 1. Mpumalanga DARDEA supports the management of Agri-Parks to ensure sustainability 2. National and Mpumalanga DAFF provide extension services to Small Holder and Farmers and Large Scale Farmers. The department will also ensure efficient management of Agri-Park by supporting farmers 3. Nkangala District Municipality will ensure relationships between stakeholders and role players in the market.
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4. Department of Trade and Industry offers financial incentives to local municipalities and communities to promote rural transformation 5. Small Enterprise Development Agency (SEDA) will support FPSUs and other agri-business in the value chain. The agency supports entrepreneurs in starting businesses and offer guidance in managing businesses. 6. National Development Agency (NDA) sill support agri-businesses in FPSUs as well as co- operatives 7. Mpumalanga Economic Growth Agency (MEGA) will support FPSUs and RUMCs
Government supports agricultural sector in order to transform rural communities and promote economic activities. Government support in sustaining development in the sector involves promotion of extension services by both government and private sector companies. Extension services refer to continuous and changing process in the rural area. The process of extension involves four elements as identified by Food and Agriculture Organization of the United Nations (FAO); namely: Knowledge and skills: Extension brings farmers more information and transfer skills to farmers in different business areas, such as business management, record keeping Technical advice and support: technical support applies directly to production activities of the farm and action needed to improve production Farmer organization: Extension services also help to set up, structure and develop organizations of local farmers Motivation and confidence: extension programmes seek to support and motivate farmers to take the initiative and participate in these services rather that work in isolation. A number of private companies in partnership with government departments offer services in a form of training in business, mentorship, capacity building
The Department of Agriculture is currently developing the national policy on extension and advisory services for agriculture, forestry and fisheries. The process of developing the policy has started in partnership with Agricultural Research Council. The policy purpose is to guide and regulate the provision of extension and advisory services in the country.
Table below summarises a few of government department or agencies that offer extension services to various businesses in agriculture.
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Table 5.2: Extension services offered by government and private organizations Agency Description Small Enterprise Provides information to small enterprises and perspective entrepreneurs that Development will help and encourage them to start and build sustainable businesses. Agency (Seda) Services provided by SEDA includes: information advice and referrals; import and export training; trade information; technical support; business mentoring; market access Grain South Africa: Grain SA in partnership with a number of organizations and government Farmer Development department offer extension advisory through individual contact with the Programme farmers, mentorship, study groups and specific training courses. South African Offers extension services to producers in the sugar industry. The services Sugarcane Research include regional extension (service medium to large scale commercial Institute growers) and small-scale grower extension. Agricultural Research Agricultural Research Council division of Subtropical crops offers extension Council: Subtropical and advisory services to its members in a form of organising study groups, farm Crops extension and visits develop government extension advisors. advisory services
Government has a number of agencies mandated to finance businesses in agricultural sector. A number of these financing products developed are aimed at promoting small businesses to better participate in the economy of the country. Financing is available in different forms such as loans, grants, incentives schemes.
The department of Trade and Industry (DTI) together with other government formed agencies has a number of funding programmes for businesses involved in agricultural activities or located in rural areas with disadvantaged backgrounds, see table 5.2. Table 5.3: Government Funding Programmes Department of Trade and Industry programmes Programme Description Business Process BPSI aims at attracting investment and creating employment opportunities in Services Incentive South Africa through offshoring activities. (BPSI) The BPSI comprises of two components as follows: a) A base incentive, b) a two- tier differential incentive for non-complex jobs and complex jobs, based on the Rand value per job determined by fully loaded costs. The base incentive is a five-year operational expenditure (OPEX) grant that tapers down in line with the narrowing cost gap between South Africa and other offshoring destinations. Critical CIP is a cost sharing grant for projects designed to improve critical infrastructure Infrastructure in South Africa. Programme (CIP)
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Department of Trade and Industry programmes Programme Description The Co-Operative The CIS is a grant scheme that supports broadening economic participation by Incentive Scheme historically disadvantaged communities to enter the mainstream economy (CIS) Incubation ISP to develop incubators and create successful enterprises with the potential to Support revitalise communities and strengthen local and national economies. ISP aims to Programme (ISP) ensure that SMMEs graduate into the mainstream economy through the support provided by the incubators. Black Business BBSDP is a cost-sharing grant offered to small black-owned enterprises to assist Supplier them to improve their competitiveness and sustainability in order to become part Development of the mainstream economy and create employment. Programme (BBSDP) The Technology THRIP is a partnership programme funded by the DTI and managed by the and Human National Research Foundation (NRF). On a cost-sharing basis with industry, THRIP Resources for supports science, engineering and technology research collaborations focused Industry on addressing the technology needs of participating firms and encouraging the Programme development and mobility of research personnel and students among (THRIP) participating organisations. SEDA Technology STP was created as part of government’s national strategy of consolidating and Programme (STP) rationalizing small enterprises support interventions across the different government departments and government agencies, within the overall objective of improving the delivery of small business support services to entrepreneurs and small enterprises. STP is a merger of the following programmes: Godisa Trust, the National Technology Transfer Centre (NTTC), the three business incubators of the DTI, the Technology Advisory Centre (TAC), the technology-transfer activities of the Technology for Women in Business (TWIB) programme the support programmes for small enterprises of the South African Quality Institute Isivande Women’s IWF aims at accelerating women’s economic empowerment by providing more Fund (IWF) affordable, usable and responsive finance. The IWF assists with support services to enhance the success of businesses. It pursues deals involving start-up funding, business expansion, business rehabilitation, franchising and bridging finance. Black Business This cost-sharing grant is offered to black owned small enterprises to assist them Supplier in improving their competitiveness and sustainability. The programme provides Development grants to a maximum of R1 million:
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Department of Trade and Industry programmes Programme Description Programme R800 000 for tools, machinery and equipment on a 50:50 cost sharing basis R200 000 for business development and training interventions on n 80:20 cost sharing basis The programme will be administered up to 31 July 2017 Agencies National Public entity that grants funds to civil society organisations to implement Development community-driven programmes with key focus areas in: Agency Early childhood development Food security Income generation and Capacity building
5.2 Organisations and Industry Associations Industry associations facilitate information sharing and promote industry development. Associations discussed below are specifically related to the district priority commodities.
5.2.1 African Farmers Association of South Africa (AFASA) The continental association in farming, AFASA was forms to assist African farmers develop and form a strong business relationship to improve and promote agricultural sector. The organisation is formed by individuals that strive to be efficient and effective in promoting farmers.
5.2.2 South African Poultry Association (SAPA) The Poultry Association acts as a channel for any matter that the industry needs to address. Information is shares and detailed studies are done in order to assist industry participants in any area of the business. The national associations have dealt with a number of issues in the industry such as; agricultural trade policy, food safety issues, training and technology transfer, curtailing smuggling, developing poultry farmers and codes of practice to name a few.
5.2.3 National African Farmers’ union of South Africa (NAFU) The national association was formed to address access to land, financial resources, development opportunities and skills amongst black farmers. The Association has formed an Agri Business Chamber that focuses purely on the business side of NAFU. Agri-Business Chamber functions are: Build a good relationship with government department and various stakeholders in the industry
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Develop Agri linkages to build capacity of smallholder farmers in doing business Build agri-business institution to address the needs of smallholder farmers Facilitate development of viable projects according to farmers’ needs Build Agri-Business Chamber as a BBBEE agricultural institution for the country.
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6 Economic and Socio-Economic Analysis
This Section provides an overview of the most important socio-economic characteristics of Nkangala DM, highlighting the population strengths and weaknesses. This overview will assist in identifying issues influenced by demographic and labour force dimensions. The following characteristics will be discussed: Population and household figures Employment Level of education Household Income
6.1 Demographic Analysis 6.1.1 Population and Household
The Table below indicates the population figures and number of households in Nkangala DM.
Table 6.1: Population and Household Figures 2011 Census Average Annual Growth Rate Estimated Population 2001 – 2011 2030 Population 1,308,129 2.43% 2,244,985 Households 356,912 3.3% 666,542 (Source: Statistics South Africa Census 2011)
Nkangala DM has a high average annual Figure 6.1: Population Distribution, 2011 population growth rate. In local Dr JS Victor Moroka, Khanye, municipalities which are more prosperous, 19% 6% the average population growth is even Emalahl eni, 30% higher. Emalahleni LM has the largest Thembisile, 24% population due to economic activity taking Steve place, mainly in the mining sector. Emakha Tshwete, zeni, 4% 18%
(Source: Statistics South Africa Census 2011 and Urban-Econ Calculations, 2014)
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6.2 Economic Profile 6.2.1 Production Structure Emalahleni LM contributes the most to the Figure 6.2: Nkangala GVA Contribution, 2013 local economy of Nkangala DM. 4% 5% 5% By comparing Figure 6.1 and Figure 6.2 it 3% Victor Khanye is evident that there is a high positive Emalahleni correlation between the size of the local Steve Tshwete economy and the average annual Emakhazeni 35% 48% income. This is indicated by Emalahleni Thembisile Hani accounting for 30% of the population the Dr JS Moroka district which is accompanied by 48% contribution to the district income. (Source: IHS Global Insight Regional Explorer, 2013)
Table 6.2: Nkangala DM Local Economic Growth Local Municipality 1996 - 2013 2013 - 2018 Sectors with High Growth Potential Victor Khanye LM 2.6% 2.7% Agriculture Emalahleni LM 2.9% 2.4% Mining and manufacturing Steve Tshwete LM 3.1% 1.9% Mining and manufacturing Emakhazeni LM 5.0% 1.7% Agriculture and tourism Thembisile Hani LM 2.8% 2.6% Agriculture Dr JS Moroka LM 1.9% 3.0% Agriculture
Table 6.2 above estimates average annual growth rates in the district. The table also indicates sectors that have potential in growing and improving overall growth in the district economic activity. It is evident that agriculture has a lot of potential in Nkangala district, hence the intervention of Agri-Park. The prominent sectors in Nkangala DM include the mining sector, transport sector, community services sector as well as the finance sector. Dr JS Moroka LM has potential in agricultural activities and this municipality will house the Agri-hub in the district.
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Figure 6.3: Sectoral Production Structure, 2013 50% 40% 30% 20% 10% 0%
Victor Khanye Emalahleni Steve Tshwete Emakhazeni Thembisile Hani Dr JS Moroka
(Source: IHS Global Insight Regional Explorer, 2013)
Figure 6.3 above depicts the district production structure per sector. Agricultural activities do not indicate high production in the district. This is the need that Agri-Parks seek to fulfill. Proper marketing, distribution and overall management of Agri-Parks in the District will improve production in the sector and the sectoral contribution towards the District GDP.
The contribution to the economy by mining sector in the local municipalities is significantly high. DR JS Moroka has a very prominent finance and community services. Its dependence on the government sector shows that it is necessary to develop other local sectors that will contribute to sustainable employment creation. Agri-Park aims to fulfill this gap of job creation, hence the strategic location of agri-hub.
6.3 Employment 6.3.1 Sectoral Employment
Employment profiles of the municipalities of Nkangala DM are indicated on Figure 6.4 below.
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Figure 6.4: Sectoral Employment, 2013 40%
30%
20%
10%
0%
Victor Khanye Emalahleni Steve Tshwete Emakhazeni Thembisile Hani Dr JS Moroka
(Source: IHS Global Insight Regional Explorer, 2013)
The trade sector, finance sector and community services sector are the sectors that employ a significant amount of people in the Nkangala DM. The mining sector is prominent in Emalahleni LM and Steve Tshwete LM. A large number of people are employed in the tertiary sector which generally employs more skilled and highly skilled people. Agri-Park intervention within Nkangala DM aims to promote skills and education to ensure that there is adequate human capital for the opportunities that are being created in agricultural activities.
6.3.2 Unemployment This subsection distinguishes between three major groups of employment: Employed individuals Unemployed individuals The Not Economically Active (NEA) portion of the population
Agri-Park establishment should assist to decrease unemployment as well as encourage not economically active people to participate in the economy in order to decrease their dependence on the working population, especially in Thembisile Hani LM and Dr JS Moroka LM, which has a high number of people who are not economically active.
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Unemployment rates are very high Figure 6.5: Unemployment Rate in Thembisile Hani LM and Dr JS 50% 45% Moroka LM. 40% 35% By analysing the unemployment 30% 25% rate together with the levels of 20% education, it is evident that in 15% 10% general, the higher the levels of 5% 0% education, the lower the unemployment rate will be. Therefore, priorities for developing Thembisile Hani LM and Dr JS Moroka LM are improving levels of Nkangala DM education and skills. (Source: IHS Global Insight Regional Explorer, 2013)
6.4 Levels of Education Levels of education achieved in the municipalities of Nkangala DM for people older than twenty years are indicate on figure 6.6 below.
Figure 6.6: Highest Level of Education (Ages 20+) 35% 30% 25% 20% 15% 10% 5% 0% No schooling Some Primary Complete Some Matric Higher Primary Secondary 2001 2011
(Source: Statistics South Africa Census 2011 and Urban-Econ Calculations, 2014)
The level of education as improved considerably since 2001. The amount of people older than 20 years with no schooling decreased from 24% to 11%, while adults with Grade 12 increased from 20% to 29%. There is still a large amount of people who only have some secondary education (33%). Vocational skills training and FET programmes should be utilised to ensure that more people obtain a Grade 12 (or equivalent) qualification. Mpumalanga University has been identified to focus on agricultural studies. This will ensure the success of Agri-Parks management with skilled workforce.
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6.5 Household Income Figure 6.8 indicates the average Figure 6.6: Average Annual Household Income, 2011 annual household income in the R 160,000 R 140,000 municipalities of Nkangala DM. R 120,000 R 100,000 Figure assists to draw attention to the R 80,000 R 60,000 importance of higher levels of R 40,000 R 20,000 education. R 0 Emalahleni LM and Steve Tshwete LM have the highest levels of education and the highest level of average annual income. In contrast, Thembisile Hani LM and Dr JS Nkangala DM
Moroka, have lower levels of (Source: Statistics South Africa Census 2011 and Urban- education, higher unemployment Econ Calculations, 2014 and considerably lower levels of average household income.
6.6 Level of Concentration: Tress Index Tress index is used to measure level of concentration which indicates how diverse the economy of the District is. A tress index of zero represents a much-diversified economy, while a number closer to 100 indicates a high level of concentration. It is recommended that the District aims at diversifying its economy instead of depending on one sector. Economy has to balance its dependence on a number of sectors rather that heavily dependent on one sector
Steve Tshwete and Dr JS Moroka LM have a high dependence on the local government sector which needs to be decreased. Hence the Agri-Park intervention aims to decrease dependence on government sector and spread out economic activity into agricultural sector. Linkages between municipalities and agricultural sector will decrease concentration on government services.
Table 6.3: Tress Index, 2013 Nkangala DM Tress Index Victor Khanye LM 41.19 Emalahleni LM 57.92 Steve Tshwete LM 57.53 Emakhazeni LM 46.72
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Nkangala DM Tress Index Thembisile Hani LM 58.09 Dr JS Moroka LM 69.59 (Source: IHS Global Insight Regional Explorer, 2013)
6.7 Comparative Advantage: Location Quotient
This subsection aims at revealing the sectors in the study area economy that have a comparative advantage. To have a comparative advantage means that this economy has the ability to render or produce a product or service more effectively and efficiently, than its counterparts. The element that determines the comparative advantage of a region is the Location Quotient (LQ) this is used mainly to determine the levels of concentration within the study area. The industry groups that dominate a specific area will have a higher LQ and vice versa.
Table 6.4: Location Quotient Interpretation LQ Label Interpretation Less than Low Local needs are not being met by the resident sector. The region in 0.75 important goods and services in this particular sector. 0.74 – 1.24 Medium Most of the local needs are being met by the resident sector. The region is both importing and exporting goods and services in this sector 1.24 – 5.00 High The sector is serving needs beyond the sector, exporting goods and services from this sector More than Very The is an indication of a very high level of local dependence on a sector, 5.00 High typical a “single-industry” community
Table 6.5: Location Quotient, 2013 Sector Victor Emalahleni Steve Emakhazeni Thembisile Dr JS Khanye LM Tshwete LM Hani LM Moroka LM LM LM Agriculture 5.16 0.19 0.92 1.57 0.26 0.56 Mining 2.57 4.71 5.08 3.67 0.60 0.00 Manufacturing 0.28 0.26 1.23 0.42 0.30 0.13 Electricity 0.29 4.98 1.98 1.32 1.24 1.12 Construction 0.73 0.71 0.45 0.75 0.84 0.74 Trade 1.16 0.74 0.50 0.73 2.15 0.77 Transport 1.40 0.59 0.29 1.76 0.75 0.48 Finance 0.42 0.36 0.37 0.33 0.40 1.66 Community 0.78 0.36 0.40 0.65 1.52 1.77 Services (Source: IHS Global Insight Regional Explorer, 2013)
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The municipalities of Nkangala DM have high comparative advantages in numerous sectors. Municipalities do not have comparative advantage in agricultural sector. Victor Khanye LM is the agricultural hub of the District while Steve Tshwete LM is the manufacturing hub of the District. Agri-Park intervention aims at promoting the sector and thus creating comparative advantage. Agri-Park goal is to maximize production, better manage production and appropriately market in the sector.
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7 Agriculture Industry Analysis 7.1 Sector Analysis Commercial crop- and livestock occur in the Emalahleni Local Municipality, the Steve Tshwete Local Municipality, and the Victor Khanye Local Municipality; while subsistence farming occurs mostly in the Dr JS Moroka Local Municipality and the Thembisile Hani Local Municipality. Table 5.1 illustrates the agriculture potential of Nkangala District Municipality. Dr JS Moroka has significant subsistence farming accounting for 23,610 ha. This is one of the priority areas with regards to emerging farmers and small scale farmers.
Table 7.1: Agriculture Potential of Nkangala DM, 2015 Local Total Commercial Dry Commercial Subsistence Crop Municipality Area Land (Ha) Irrigation (Ha) Agriculture (Ha) Potential (Ha) Area (%) Victor Khanye 156 778 90 280 731 0 58.05% Dr JS Moroka 141 647 3 145 7 23 610 18.89% Emakhazeni 473 559 51 721 3 189 0 11.60% Emalahleni 267 761 77 114 748 0 29.08% Steve Tshwete 397 645 143 033 1 064 0 36.24% Thembisile 238 435 24 354 1 259 25 10.75% Source: DARDLEA, 2015
GVA is a good indicator of the importance Figure 7.1: Provincial Agriculture GVA of the industry to the specific area and how it compares other industries in the same vicinity. Compared to the agriculture sectors Gert Ehlanzeni of the Ehlanzeni District and the Gert Sibande Sibande DM, 55% DM, 64% District, the agriculture sector in Nkangala makes the smallest contribution to the
Provincial agriculture sector. Nkangala DM, 36%
Source: IHS Global Insight Regional Explorer, 2013
The two local municipalities that contribute the most the agriculture sector in Nkangala District include Steve Tshwete LM (43%) and Victor Khanye (31%) LM; these two local municipalities have more commercial farmers compared to the remaining local municipalities.
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Figure 7.2: District GVA The main agriculture activities in Thembisile Dr JS Nkangala District include: Hani, 2% Moroka, Emakhazen 4% i, 7% Maize and soya farming Poultry farming Victor Khanye, Vegetable farming – especially 31% subsistence farming Steve Tshwete, Livestock farming (cattle, 43% Emalahleni, sheep and pigs) 13%
Source: IHS Global Insight Regional Explorer, 2013
7.2 Local Projects There are a number of support programmes and projects in Nkangala District that play a vital role in the success of the Agri-Park. These projects and programmes provides assistance in developing farmers (see Table 5.2) and the local agriculture sector which is vital for the success of the Agri-Park.
Table 7.2: Farmers to be supported Association Number of Farmers Hectares Commodities Irrigation Schemes 184 134 Vegetables Primary Agricultural 823 2,748 Maize, sunflower, Co-operatives cotton, vegetables Land reforms farms 15 185 Cotton, vegetables
Total 1,022 3,067 -
Table 7.3: Registered Projects Aligned to Agri-Parks Project Name Commodity Land Doornrug Livestock, maize Acquisition Roodepoort Livestock RECAP KwaMhlanga Poultry Project Broiler chickens Eensaamheid Livestock, vegetables REID Sensation Mango Project Mango Senotelelo Poultry Value Chain Broiler production, layers, hatchery, abattoir and feedmill Red meat Improvement Project Livestock Grain Production Project Maize RID Sybrandskraal AVMP Livestock Gemsbokspruit AVMP Livestock
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Project Name Commodity Gembsbokfontein AVMP Livestock The department is currently supporting and implementing projects across four of its programmes to support agriculture and rural development in the district. The project range from crop production, agriculture infrastructure, livestock, and poultry as illustrated in Table 5.3.
The Table below provides details on DARDLAE projects registered within the Nkangala District. The farms being supported by the department is located in Emalahleni, Steve Tshwete, Dr JS Moroka, Thembisile Hani and Victor Khanye local municipalities.
Table 7.4: DARDLAE Registered Projects Municipality Name of Farm Hectares Commodity Emalahleni LM Ruitkuil 57 IS 483 Grain crops Steve Tshwete LM Bankfontein/Rondebosch 700 Vegetables, soya beans Elandspruit 291 JS 331 Crops, livestock Dr JS Moroka Pieterskraal Farm 500 Sunflowers, vegetables Thembisile Hani LM Kwaggafontein 169 JR 179 Crops Victor Khanye Boschpoort Farms 211 IR 730 Crops Total - 2,923 -
There are some existing developments that will support the Agri-Park, however, not all of the infrastructure is in working order. See Table 7.5.
Table 7.5: Current Development within Agri-Parks Support Infrastructure Location Approx. Distance from Agri-Park Condition Maize Mill Nokaneng 40 km Need repairs Bakery Senotlelo 17 km Operational Feedlot Marapyane 62.4 km Construction completed
7.3 Resource Analysis 7.3.1 Topography and Soils The topography of the District can be described as an undulating landscape, with the occurrence of rocky outcrops along the Olifants- and Wilge River. The Steenkampsberg Plateau comprises a large component of the eastern part of the District. (Nkangala SDF)
There are six soil types that are found within the District, namely: Red Yellow Apedale, freely drained soils PlinthicCantena, Upland Duplex and Margalitic soils Prismacutanic and Peducatanic diagnostic horizons dominant soils
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Vertic, Melanic, red structured diagnostic soils Glenrosa and Mispah forms Rock areas with little or no soils
7.3.2 Hydrology Nkangala District falls within the Inkomati and Upper Olifants Water Management Areas. The Olifants River forms the main drainage system for the area. The western extent of the District is drained by the Elands River while the central areas are drained by the Olifants- and Steelpoort Rivers to the north and the Komati River in the south-east. The District also has several major dams including the: Emalahleni Dam – used for domestic and industrial water Middelburg Dam – used for domestic and industrial water Bronkorstspruit Dam – used for domestic, industrial and irrigation water Rhenosterkop Dam – used for domestic and irrigation water Loskop Dam – irrigation
Map 7.1 indicates the annual rainfall across the District. The eastern, higher lying areas have a considerably higher rainfall than northern areas within the District.
Map 7.1: Annual Rainfall
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Source: Manstrat, 2015 7.3.3 Vegetation
The field types occurring within the District can be categorised into three groups, namely Tropic Bush and Savannah types, Turf Highveld and Bankenveld. Bankenveld covers the largest part of Victor Khanye LM, Emalahleni LM and Steve Tshwete LM while the north-western areas of this District is covered in Mixed Bushveld and Sourish Mixed Bushveld. The Nkangala District also forms part of the Savannah and Grassland Biomes to the north and south respectively.
7.3.4 Land Capability
Land with a high capability for agriculture is located mostly in the southern areas of the District, which coincides with the mining areas in the District. The land capability in Dr JS Moroka LM ranges from non-arable land to having marginal potential. It is critical that land use in the District is sustainable in order to ensure the long term growth of the agriculture sector. Areas which are classified as non-arable land can be used for grazing, livestock farming, poultry farming and hydroponic farming.
Table 7.6: Dr JS Moroka Agriculture Potential Total Area Commercial Dry Commercial Subsistence Crop Potential (Ha) Land (Ha) Irrigation (Ha) Agriculture (Ha) Area (%) 141 647 3 145 7 23 610 18.89%
Source: DARDLEA, 2015
Northern areas of Nkangala District (Dr JS Moroka LM and Thembisile Hani LM) have higher grazing capacities compared to southern areas. This provides opportunity for developing livestock farming and associated industries.
Map 5.2 illustrates the grazing capacity for livestock in the district. The green shaded areas are the optimal grazing regions and is concentrated around the Stoffberg, Dullstroom, Emakhazeni (Belfast) and Emgewenya (Waterval Boven) areas with small pockets around Dr JS Moroka.
The brown shaded areas are areas not available for grazing, in the most eastern part of the district this is due to forestry plantations in that area while the central and western areas shaded in brown is mainly due to coal mining and electricity generation at the various power plants in the district.
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Map 7.2: Grazing Capacity
Source: Manstrat, 2015
7.4 Commodity Selection Criteria
In order to select the commodities for the Agri-Park, evaluation criteria have been developed. The criteria include analysis of:
Biophysical criteria Enterprise viability criteria Economic development criteria Political and social criteria
Table 7.7 highlights the factors that where considered as part of the criteria listed above.
Table 7.7: Commodity Selection Criteria Biophysical Enterprise Viability Economic Development Political and Social Temperature Transport, market Linkages and Political and Water/moisture access and processing institutional Land type, demand opportunities priorities
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Biophysical Enterprise Viability Economic Development Political and Social capability and soil Strategy, payback Job creation Social priorities Weed, pest and and profitability Local development Food security disease resilience Human, physical Global and Adaptability to and financial competitiveness and sustainability adverse conditions capital trade
Each commodity is scored based component of the selection criteria between 0 and 3: 0 = Impossible to grow or almost certainly not profitable or competitive, or highly unfavourable condition that are unlikely to be managed successfully. A score of zero disqualifies the crop except where otherwise stated. 1 = Within marginal range (technically possible but probably not profitable or competitive) 2 = Within near-optimal range, sufficiently favourable but not ideal condition 3 = Within optimal range, most favourable or ideal condition;
The Table below indicates the weight that was assigned to each criterion. The weights range from between 1 (low importance) and 3 (high importance).
Table 7.8: Weights Criteria Weight A. Biophysical Criteria Temperature 3 Water/moisture 3 Land type, capability and soil 2 Weed, pest and disease resilience 1 Adaptability to adverse conditions 1 B. Enterprise Viability B.1 Transport, Market Access and Demand Distance to market and transport cost 3 Current demand 3 Future market growth potential 2 Market openness 1 B.2 Strategy, Payback and Profitability Business strategy and positioning 2 Payback period 1 Profitability 3 B.3 Human-, Physical- and Financial Capital Familiarity and local knowledge/skills 2 Labour cost and productivity 2
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Criteria Weight Implements and infrastructure 1 Ease to finance 2 C. Economic Development Criteria C.1 Linkages and Processing Opportunities Forward and backward economic linkages 1 Processing opportunities at district level 3 C.2 Job Creation Direct, on-farm creation 1 Indirect and induced job creation 1 Job quality/decency 1 C.3 Local Development Local opportunities and agglomeration 3 Agro-intensification and local GDP growth 1 C.4 Global Competitiveness and Trade Global competitiveness 3 Export potential 2 Import substitution potential 3 D. Political and Social Criteria D.1 Political and Institutional Issues Government priority, including APAP 2 Shortlisted by the District 2 Existing successful or planned projects 1 State/communal land suitability 1 D.2 Social Issues Acceptability (local “buy-in”) 2 Income equality 3 Black smallholder suitability 3 Crime and vandalism resilience 1
D.3 Food Security and Sustainability Contribution to food security 3 Sustainability 1
7.5 Commodity Identification& Prioritisation
The list below has been identified as a preliminary list of commodities within Nkangala. Maize Pig production Sunflower Livestock Vegetables Cotton
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Soya beans Poultry Sorghum Wheat Tobacco Canola
The 12 commodities listed above where all ranked according to the criteria as set out in the previous subsection in order to identify the top commodities for Nkangala District.
The Table below indicates the top 5 commodities based on the selection criteria as listed in Table 7.7 and Table 7.8.
Table 7.9: Prioritised Commodities Commodity Score Comment 1. Beef cattle 93% Excellent extensive beef production potential, especially in combination with optimal supplementary feeding. Most suitable breeds include Bonsmara, Beefmaster and indigenous breeds. Also excellent opportunities for intensive production in feedlots due to proximity to both feedstock and markets and a favourable climate. 2. Maize 89% Good potential for rain fed maize production, especially towards the east where very high yields can be attained. 3. Vegetables 88% High vegetable production potential for a large variety of vegetables, especially towards the east where conditions at places may be so favourable that relative low quantities of water for supplementary irrigation is needed. Highly competitive for Potatoes, Carrot, Cabbage, Phaseolusbean and Peas (especially varieties for dry pea production). Other vegetables with high commercial potential include Beetroot, Cucumber, Green mealie, Lettuce and Pumpkin.
4. Dry beans 85% Very suitable for the Delmas and Middelburg areas. Although South African dry bean varieties are not in demand in export markets, local demand are very strong and it is a very important food security crop with important value adding opportunities. 5. Pigs 83% Excellent pig production potential due to proximity to both feedstock and markets, as well as a favourable climate and environmental conditions for piggeries. 7.6 Commodity Description
This subsection will provide a commodity description of the three highest ranking commodities: 1. Beef Cattle 2. Maize 3. Vegetables
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7.6.1 Beef Cattle
Cattle farming for beef occurs across South Africa ranging from large commercial farmers to subsistence- and communal farmers. The total number of cattle in South Africa at the end of August 2014 is estimated at 13.81 million, comprising various international dairy and beef cattle breeds as well as indigenous breeds such as the Afrikaner and the Nguni.
Figure 7.3 illustrates the distribution of cattle per province in South Africa.
Figure 7.3: Provincial Distribution of Cattle, 2014 Beef cattle contribute Western North West, Northern approximately 80% of the total Cape, 4.1% 12.2% Cape, 3.5% number of cattle in the country, Gauteng, 1.8% Free State, translating into an estimated 11.04 Limpopo, 16.7% million animals, while dairy cattle 7.6% make up the remaining 20%. The four Provinces with the highest amount of Mpumalan ga, 10.2% cattle include the Eastern Cape (20.4%), KwaZulu-Natal (19.8%), Free State (16.7%) and Mpumalanga Eastern Cape, 24.0% (10.2%). KwaZulu- Natal, 19.8%
Source: DAFF, 2015 In the 2014 season, 2.707 million cattle were slaughtered within South Africa, of which 1.116 million occurred within Mpumalanga. The Figure below illustrates the total beef production within South Africa since 2003 as well as imports.
Figure 7.4: Beef Production and Imports, 2003 – 2014 It is evident from the Figure that beef 1200 70 production on South Africa has 1000 60 increased considerably over the last 800 50 40 600 10 years while imports have drastically
30 1,000 1,000 t 400 20 1,000 t decreased. 200 10 0 0
Production increased from just over
2004 2008 2003 2005 2006 2007 2009 2010 2011 2012 2013 2014
Total Beef Production Beef Imports 600 000 tons to almost 1 000 000 tons while imports decreased from 40 000 Source: DAFF, 2015 tons to just under 20 000 tons.
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The increase in production was accompanied by an increase in consumption of beef as well as increase in the price of beef as seen in the Figure 7.5 and Figure 7.6.
Figure 7.5: Beef Consumption Figure 7.6: Price of Beef 1200 18.51 20 35 18 1000 30 16 14 800 25 12
600 10 20
Kg 1,000 1,000 t 8 R/kg 15 400 6 4 10 200 2 5 0 0
0
2006 2003 2004 2005 2007 2008 2009 2010 2011 2012 2013 2014
2006 2004 2005 2007 2008 2009 2010 2011 2012 2013 2014 Beef Consumption (1,000t) 2003 Annual Per Capita Beef Consumption (kg) Purchase Price of Chilled Carcasses R/kg
Source: DAFF, 2015 Source: DAFF, 2015
The most significant development in the red meat industry has been vertical integration, occurring through feedlots entering the red meat market; the marketing regime; and the major expansion of the abattoir industry. Vertical integration has characterised the industry over recent years, mainly through larger feedlots establishing their own abattoirs. Furthermore, some feedlots have included further integration down the value chain and sell directly to the customer through their own retail outlets, for example Eskort. The previous market regime only allowed meat wholesalers to purchase carcasses on a wholesale system. Now, wholesalers can source live animals (excluding weaners) directly from farmers and feedlots on a willing buyer/ willing seller basis. This allows the wholesaler to take ownership of the animal prior to slaughtering. The animals are then distributed to an abattoir of the wholesalers’ choice from which point the carcasses are distributed to various retailers.
The deregulation of the red meat industry in the early 1990s has seen a significant expansion in the number and capacity of abattoirs. The industry can be further divided into those abattoirs linked to feedlots, the wholesale sector, or municipal owned, and those that are owned by farmers and small, medium and micro-sized enterprises (SMME’s).
Approximately 449 red meat abattoirs currently operate in South Africa. According to the
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Department of Agriculture, Forestry and Fisheries (DAFF) approximately 60% of all slaughtering is carried out by abattoirs that are highly regulated with a high throughput capacity. Other large-scale abattoirs, known as low throughput abattoirs also operate within the province, with approximately 34 spread throughout the country. Many of these abattoirs have linkages with feedlots. Approximately 60% of the 80% of livestock that go through feedlots are slaughtered by abattoirs that are vertically integrated. The remaining abattoirs are considerably smaller, servicing small livestock producers and localized population centres, most commonly known as butchers and rural throughput abattoirs.
7.6.2 Maize Maize is one of the most important grain crops in South Africa and is the staple food of a large portion of the population. The South African maize industry was deregulated in 1997 and is operating in a free-market environment where producers sell to whomever they wish and the prices are determined by supply and demand.
Maize is produced across South Africa, and production has increased considerably over the last ten years. The Figures below illustrates the total production (1000 tons) as well as the total area planted (ha) within South Africa. From the Figure it is evident that although the area planted has decreased somewhat, the yield per hectare has almost doubled over the past ten years. This can be a result of increased usage of GMO seeds and farms under irrigation.
Figure 7.7: Area Planted (Ha) Figure 7.8: Total Production 4,000 6 16,000
3,500 14,000 5 3,000 12,000 4 2,500 10,000
2,000 3 8,000 1,000 1,000 t 1,000 1,000 ha 1,500 6,000 2 Ton/Hectare 1,000 4,000 1 500 2,000
- 0 -
2003 2006 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2003 2004 2005 2007 2008 2009 2010 2011 2012 2013 2014
Area planted (1,000 ha) Yield (ton/ha) Total production Mpumalanga Production
Source: DAFF, 2015 Source: DAFF, 2015
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Figure 7.9: Provincial Production, 2014 The provinces that produces the most Western Eastern Northern maize include the Free State (40%), Cape, 0% Cape, 1% Cape, 6% Mpumalanga (22%) and North West (16%). The North West and Free State plant mostly North Gauteng, West, 16% white maize while Mpumalanga plants 5% mostly yellow maize. White maize is mostly used for human consumption while yellow Free State, maize is predominantly used for animal Mpumalan 40% ga, 22% feed. Consumption of maize has increased over the last 10 years as seen in the Figure below.
Limpopo, KwaZulu- 3% Natal, 5%
Source: DAFF, 2015
South Africa has seen a steady increase in the amount of maize consumed with an average increase of 2.9% per annum between 2003 and 2014. In 2014, a total of 9,659,000 tons of maize was consumed. Consumption per capita was recorded at 82 kg per annum in 2014.
Figure 7.10: Maize Consumption, 2003-2014 10,000 82.13 100 9,000 90 8,000 80 7,000 70 6,000 60 5,000 50
1,000 1,000 T 4,000 40 Kg Kg perYear 3,000 30 2,000 20 1,000 10 - 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Commercial consumption(1,000 t) Consumption kg per year
Source: DAFF, 2015
Not only did the production and consumption of maize increase since 2003, the price of maize also increased considerably over the last 10 years as seen in the Figure below.
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Figure 7.11: Price Index for Maize Figure 7.12: Gross Producer Prices, 2003- (2009/10 = 100) 2014 250 2,500
200 2,000
1,500 150
1,000 100
500 50
-
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Producer price - Gross White (R/t) Producer price - Gross Yellow (R/t) Source: DAFF, 2015 Source: DAFF, 2015
7.6.3 Vegetables
Vegetables are produced in most parts of the country. However, in certain areas farmers tend to concentrate on specific crops; for example, green beans are grown mainly in Kaapmuiden, Marble Hall and Tzaneen, green peas mainly in George and Vaalharts, onions mainly in Caledon, Pretoria and Brits, and asparagus mainly in Krugersdorp and Ficksburg regions.
The production of vegetables in South Africa for the period 2009/10 to 2013/14 compares as summarised in the Table below.
Table 7.10: Production Volumes of Vegetable Types, 2010-2014 Year July to June 2009/10 2010/11 2011/12 2012/13 2013/14 ‘000 tons Potatoes 1 955 2 165 2 205 2 202 2 193 Tomatoes 575 523 545 527 525 Pumpkins 234 237 244 247 245 Green mealies 339 340 347 361 362 Onions 489 563 625 596 592 Sweet potatoes 60 63 55 57 69 Green peas 17 12 8 11 12 Beetroot 67 62 66 68 61 Cauliflower 25 16 16 14 12
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Year July to June 2009/10 2010/11 2011/12 2012/13 2013/14 ‘000 tons Cabbage and red 141 153 141 136 145 cabbage Carrots 151 152 178 183 184 Green beans 23 25 25 24 19 Other 400 406 421 420 416
Total 4 476 4 717 4 876 4 846 4 835 Source: Abstract of Agricultural Statistics, 2015
Since 2003 there has been a general increase in vegetable production in South Africa as seen in Figure 7.13. Although, since 2012, production has started to decrease. Concerning the major vegetable types in terms of volumes produced, the production of green mealies rose slightly from approximately 361 000 tons to 362 000 tons and sweet potato’s increased by approximately 12 000 tons or 21.2%. Most of the vegetable crops, however, decreased over the period.
Figure 7.13: Total Vegetable Production, 2003-2014 6000
5000
4000
3000
1,000 1,000 ton 2000
1000
0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: DAFF, 2015
The relative importance of the major vegetable types, according to gross value of production, during the 2013/14 season, is depicted in Table 7.11.
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Table 7.11: Relative Importance Potatoes are clearly a vegetable of high Rank Product % Share relative importance, with an approximate 1 Potatoes 42% gross value of production equal to 42% of the 2 Tomatoes 16% total for vegetables. Tomatoes and onions 3 Cabbages 13% are the also important vegetable crops with 4 Onions 4% a combined gross value of 29% 5 Pumpkins 3% 6 Carrots 3% 7 Gem squashes 2% 8 Sweet potatoes 1% 9 Cauliflower 1% 10 Green beans 1% Source: Abstract of Agricultural Statistics, 2015
Figure 7.14: Distribution Channels, 2014 Figure 7.14 illustrates the main distribution Exports channels for vegetables. The majority of 4% fresh vegetables are either sold directly
Fresh by farmers or it is sold at fresh produce Produce Direct Sales markets. Only 7% of vegetables are used and Own Markets Consumption 46% for further processing while only 4% is 43% exported.
Processing 7%
Source: Abstract of Agricultural Statistics, 2015
Figure 7.15: Volumes and Sale Price From Figure 7.15 it is evident that the 5 000 4 500 sale of vegetables at fresh produce 4 000 4 800 markets has increased from 4087 tons 3 500 4 600 in 2005 to 4 835 tons in 2013 while the 3 000 4 400 2 500 price (Rand/ton) has nearly doubled from almost R2 000 per tonne to R4 000
4 200 2 000 R/ton 000 000 tons 1 500 per ton. 4 000 1 000 3 800 500 3 600
Source: Abstract of Agricultural Statistics, 2015
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Table 7.12: Average Price of Vegetable Types, 2011-2014 Product 2011 2012 2013 2014 Average Price Increase (%) R/ton Potatoes 2 591 2 645 3 379 3 428 10% Tomatoes 4 339 4 407 4 847 6 082 12% Cabbages 1 516 1 772 2 109 2 180 13% Onions 2 221 2 587 3 433 3 334 15% Pumpkins 1 675 1 617 2 156 2 128 10% Carrots 2 815 2 633 3 154 3 644 10% Gem squashes 2 615 2 702 2 666 3 248 8% Sweet potatoes 2 995 3 636 2 798 3 724 10% Cauliflower 4 145 4 960 5 066 8 380 29% Green beans 6 572 6 815 7 263 8 454 9% Hubbard squashes 1 880 1 844 1 954 2 283 7% Beetroot 2 821 2 365 3 858 4 335 20% Cucumbers 5 862 7 337 7 320 8 487 14% Lettuce 4 263 4 828 4 573 5 508 9% Green peas 21 035 27 516 23 923 37 621 25% Green mealies 9 471 11 409 8 344 13 089 17% Marrows 8 575 7 648 9 085 10 718 9% Turnips 3 651 2 728 3 527 4 052 6% Butternut squashes 2 420 2 408 2 871 3 227 10% All vegetables 2 944 3 047 3 683 4 024 11% Source: Abstract of Agricultural Statistics, 2015 Table 7.12 indicates that, on average, prices of vegetables have increased by 11% annually between 2011 and 2014. Of the vegetables above, cauliflower, beetroot, and green peas increased the most over the period, with increases of 29%, 20% and 25% respectively
The importance of vegetables in a healthy diet is being strongly promoted by all the stakeholders in the fresh produce marketing chain. The per capita consumption of fresh vegetables was 43.01kg during 2014, approximately 2.8% lower than the previous year, as illustrated in Table 7.13. The Table below summarises consumption of vegetables (excluding potatoes) between 2010 and 2014.
Table 7.13: Per capita consumption, 2010-2014 Year 2010 2011 2012 2013 2014 Vegetables (potatoes excluded) (Kg/Year) 44.75 43.90 45.68 44.28 43.01
Source: Abstract of Agricultural Statistics, 2015
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Figure 7.16: Per Capita Consumption Trend Per capita consumption of vegetables has 47.00 remained relatively stable over the last 10
45.00 years, ranging between 43.01kg per year to
43.00 45.68kg per year. Figure 7.16 illustrates the fluctuations in per capita consumption of 41.00 vegetables between 2004 and 2014. 39.00
37.00
35.00
Source: Abstract of Agricultural Statistics, 2015
7.7 Products 7.7.1 Beef Cattle
Along with fresh meat produced for the local market and frozen meat for the export market, other value additive activities include the production of the following products: Cured, cooked and smoked meat products such as cooked silverside Roasted muscle meat products such as beef hind leg cuts Dried or smoked meat such as biltong, dried sausage and smoked beef Brawn Canned products
Other non-edible products of this industry includes:
Raw hides and skins Leather and leather products
7.7.2 Maize
Diagram 7.1 illustrates the various products that can be produced from maize.
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Diagram 7.1: Maize Products Maize Green Maize
Dry milling Wet milling
Samp Gluten Animal Feed Supplements Maize Grits Husk
Unsifted, sifted, Starch Starch Paste coarse, super and special maize meal Germ Foodstuffs
Maize oil Industrial Products
Cooking oil, margarine, bio-diesel
Industrial products
Source: DAFF – Maize Market Value Chain Profile, 2012
7.7.3 Vegetables
There are a number of agro-processing options for vegetables including: Grading and packing Freezing Canning Used for baby foods, pet foods and reconstituted vegetables
8 Commodity Analysis – Beef Cattle 8.1 Market Assessment 8.1.1 Local Markets
The red meat industry in SA evolved from a highly regulated environment to one that is totally deregulated today. Since the deregulation of the agricultural marketing dispensation in 1997,
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the prices in the red meat industry are determined by demand and supply forces.
Meat consumption in South Africa has expanded rapidly over the past decade and while continued growth in meat consumption is projected in the coming decade, a confluence of macroeconomic factors is expected to result in higher meat prices and slower consumption growth relative to the past. Income growth remains the core driver of rising meat consumption and hence the cautious outlook for income growth in South Africa is a fundamental factor underlying slower demand growth. Furthermore, relative prices and consumer preferences drive the choice between various meat types over time. Chicken remains the most affordable source of protein and is expected to account for 65% of additional meat consumed by 2024.
While 2013 marked a return to profitability in the global context, severe drought conditions in South Africa and neighbouring countries as well as substantial depreciation in the exchange rate resulted in persistently high feed prices and continued depreciation of the local beef industry. The drought conditions induced a significant oversupply in the beef market both from South Africa and neighbouring countries, depressing prices, despite the upward trend in global markets. Whilst prices increased sharply in 2014, cattle slaughter numbers increased for the second consecutive year, which would indicate that domestic producers have yet to enter a phase of herd rebuilding, despite improved profitability. Persistent drought conditions in the early part of 2015 resulted in domestic feed grain prices rising, and while domestic beef prices have reached record levels, producer margins remain tight. Prices of beef increased significantly over the past 3 years increasing from around R 24/kg in 2010/11 to R 32/kg in 2013/14 which is an increase of 25% (Extension Suite Online). In the face of growing demand, prices are projected to increase continuously over the next decade, reaching R57/kg by 2024. This represents an average annual increase of 5.7%, which is marginally above general inflation and hence in real terms prices increase slightly over the baseline (BFAP Baseline Agricultural Outlook, 2015).
The beef supply chain has become increasingly vertically integrated. This integration is mainly fuelled by the feedlot industry where most of the large feedlots own their own abattoirs and/or have some business interest in certain abattoirs. In addition, some feedlots have integrated further down the value chain and sell directly to consumers through their own retail outlets. Some abattoirs have also started to integrate vertically towards the wholesale level.
Under the previous marketing regime, wholesalers mostly bought carcasses through the auction system. Currently, many wholesalers source live slaughter animals directly from farmers or feedlots on a bid and offer basis, i.e. they take ownership of the animal before the animal is slaughtered. The animal is then slaughtered at an abattoir of the wholesaler’s choice, where
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after the carcass is distributed to retailers. In some instances, the public can also buy carcasses directly from wholesalers.
The abattoir industry has expanded tremendously in number and in capacity. In this regard, it is important to note that this industry can be divided into those abattoirs that (i) are linked to the feedlot sector and the wholesale sector, or are owned by municipalities and (ii) those that are mainly owned by farmers and SMME’s. The former abattoirs are mainly class A and B abattoirs, whereas the latter are usually classified as C, D and E class abattoirs. There are approximately 500 abattoirs slaughtering 2.3 million cattle on an annual basis. Approximately 40% of all slaughtering are performed by abattoirs that may slaughter an unlimited number of animals (Class A) and approximately 60% of cattle are slaughtered by highly regulated abattoirs (Class A & B) (Profile of SA Beef Market Value Chain, 2014).
8.1.2 Exports
Beef exports quantities are relatively small and SA is not regarded as a serious exporter within the world market. Exports were relatively higher in the early 2000’s (around 11 000 tons) and then started on a fluctuating but decreasing trend to date. Export quantities for the past few years averaged around 4 000 tons per annum. However, there was there was a significant increase of 86% in export quantity and a decrease of 36% in import quantity during 2013 compared to 2012. The increase in exports might be due to the unbanning of South African bovine animals and its products. In 2013 South Africa exported 8 000 tons of beef yielding an export value of R 396 million.
In recent years (2013) exports are mainly to SADC and other African countries (6 000 tons) and Asia (1 800 tons) with Europe in the third place. Within SADC Mozambique is the largest importer (73% of total exports) followed by Angola and Mauritius. Other African countries to whom we export are Egypt, Nigeria and DRC (Profile of SA Beef Market Value Chain, 2014.
Of the provinces Gauteng has recorded the highest export values of beef between the periods 2002 and 2011. This is mainly due to the fact that most exporters of beef are situated in Gauteng Province and the greatest proportion of beef was exported to neighbouring countries with Gauteng Province as the main exit point. Exports of beef were also recorded in all other eight provinces.
8.1.3 Imports
South Africa imported approximately 4 400 tons of beef in 2013 at an estimated value of R 97
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million. The import quantity decreased by 36% in 2013 compared to 2012, this might be due to the outbreak of Foot and Mouth Disease (FMD) which made South Africa to be self sufficient in beef and global economic meltdown which pushed consumers to switch to low priced protein content meat like chicken meat. For the period 2004 to 2013 the quantity of beef imports has decreased by 73 per cent (with imports peaking in 2005 at 20 000 tons).
In earlier years we imported beef mainly from the Americas and the highest quantities of imports were from South America (Brazil, Uruguay, Argentina and Paraguay). In recent years SA import primarily from Oceania with Australia serving as the main exporter (14 000 tons in 2012) followed by New Zealand. Namibia also exports 70% of its total beef production to South Africa in the form of livestock (amounting to approximately 25 000 tons) to increase local stock.
South Africa applies the MFN import tariff of 40.00% to all imports of beef excluding Namibia which is a member of SADC. Namibia receives an Intra SACU tariff rate of 0.00% for the past two years when exporting fresh or chilled beef carcasses and half carcasses to South Africa. South Africa also applies a preferential tariff rate of 0.00% to SADC (Profile of SA Beef Market Value Chain, 2014).
8.2 Specific Marketing Channels
There are a number of specific marketing channels that can be used to sell beef and beef products, namely: 1. Direct sales (farmer to consumer) 2. Small independent shops or supermarkets 3. Large retail chains 4. Butchers 5. Catering businesses, organisers of events and event-hosting venues 6. Livestock speculators 7. Livestock auctioneers 8. Meat exports 9. Abattoirs and meat processors 10. Leather tanneries 11. Ad hoc selling of cattle to other livestock farmers for re-stocking, breeding stock, initial or additional animal stock or raising on their pasture or veldt. 12. Feedlots buying young cattle for "finishing"
The top priorities for developing marketing channels include:
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Table 8.1: Opportunities Marketing Channel Priority & Gaps/Opportunities Large retail chains This could be a primary marketing channel for cattle farmers participating in the Agri-Parks system. Important to brand the meat as locally produced, and to lobby with government to engage much stronger in "buy-local" campaigns. Although there are gaps or room for significant growth in the market for products such as organic beef, grass-fed beef and hormone and antibiotic free beef, these niche markets are still too small locally, but could be an important niche market in the near future. Butchers High potential, however, it is essential to make an arrangement with abattoirs to slaughter the animals for a fee, then it can be collected and sold to butchers. This is a gap in the market because the level of coordination that can be provided through the Agri-Park system could make it very profitable to coordinate slaughter by abattoirs and delivery to butchers (i.e. better than the coordination that individual farmers or abattoirs can do on their own). Therefore, profit that would have gone to abattoirs can be retained by Agri- Park farmers. Meat exporters High potential, specifically for grass-fed beef and organic beef. Abattoirs & meat High priority during the initial phase, especially in case supply contracts to more processors profitable marketing channels cannot be secured. Leather tanneries High priority because the leather industry holds significant potential for further development, however, it is essential to stimulate development of the leather industry as well.
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8.3 Value Chain Assessment
Diagram 8.1: Beef Value Chain Input Resources
Production
Farm gate sales Export Feedlots Auctions
Abattoirs
Offal’s Market Hides/Skin Market
Processing Butcheries Other Private Markets
Wholesalers
Retailers Small Shops Tuck Shops Hawkers
Consumers
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8.4 Agro-processing opportunities (products)
The following Table highlights some opportunities for local value-adding to beef and beef cattle.
Table 8.2: Processing Opportunities Processing option, Priority & gaps/opportunities method or product Slaughtering Opportunities for branding in the way animals are slaughtered, including Halal, and humane methods. Packaging and Extensive opportunities for modified atmosphere packaging and vacuum branding packaging, packaging of certain cuts in butcher paper, as well as local branding (and only to some extent Geographic Indicator branding opportunities for beef). Drying, including The biltong market is large and has room for even further development. The biltong and jerky American style jerky could also be locally produced, and it is likely that the local market will be open to this product, given that sufficient market development is done. Fresh sausages Opportunity for differentiation by mixing a variety of different meat, spices and other flavours/foods to produce a variety of unique sausages. Cooked and smoked Very high potential because of large demand, longer shelf life and because sausages it poses an opportunity for differentiation by mixing a variety of different meat, spices and other flavours/foods to produce a variety of unique sausages. Dry and semi-dry Very high potential because it doesn’t need refrigeration and because it sausages poses an opportunity for differentiation by mixing a variety of different meat, spices and other flavours/foods to produce a variety of unique sausages. Leather tanning High potential, because the local leather industry does have significant potential to hides, and to develop more sophisticated and a larger diversity of leather products, more competitively. More farmers should be encouraged to farm with non-hump breeds of cattle, and to take better care of their animal's skin during handling through the lifetime.
8.4.1 Competitors & Stakeholders There are a number of large beef producing companies in South Africa, these include: Beefcor Beefmaster Bull Brand Chalmar Beef EAC Group Karan Beef
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Sparta Beef
There are a number of potential stakeholders with in the Nkangala District including, abattoirs, auctioneers, feed manufacturers, feedlots and veterinarians.
Table 8.3: Beef Cattle – Stakeholders Name Type Belfast Abattoir Abattoirs Witbank Abattoir (Pty) Ltd Abattoirs W L OscheLewendehawe Auctioneers Afgri (Emalahleni) Cooperatives SA Feed and Grain Cooperatives Kwamhlanga Regional Office Department of Agriculture Middelburg Department of Agriculture Department of Agriculture Alzu Feeds (Delmas) Feed Manufacturers Alzu Feeds (Emalahleni) Feed Manufacturers Alzu Feeds 1 (Middelburg) Feed Manufacturers Kanhym Estates Ltd Feedlots Ranch Estates Feedlot (PTY) Ltd Feedlots SKS Boerdery Feedlots SA Feed and Feedlot Feedlots
There are also a number of industry associations in the beef cattle industry, namely: Red Meat Industry Forum (RMIF): The forum is representing all national organisations in the red meat industry. Its primary purpose is to deliver the support required to maintain a viable red meat industry, including negotiating for an enabling regulatory environment, informing industry policy and facilitating legislative compliance. Red Meat Producers Organisation (RPO): The service organisation acts as a mouthpiece for South African commercial red meat producers, and promotes sustainability and the profitability of the red meat industry in South Africa. National Emergent Red Meat Producers Organisation (NERPO): The NERPO supports the development of emerging farmers by influencing public policy and legislation; facilitating access to technical support, finance and markets; and encouraging greater participation of black farmers, women and youth in the industry. South African Feedlot Association (SAFAS): The SA Feedlot Association is an umbrella organisation that addresses the collective interest of South Africa feedlot operators by providing support and resources for relevant industry bodies.
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8.5 Technology Technology plays a vital role in the development of the agricultural industry and today farmers use technology to assist in producing food for a growing world. High tech advances have been assist in making farming life easier and more profitable. Smaller farmers can hold their own by moulding the technology to fit their management techniques and needs.
The Table below indicates the various technologies that the Agri-Park can use within Nkangala District. By utilising the various technologies, the small scale and emerging farmers can improve on the production of the variety of livestock farmed and ultimately increase their profit.
The technologies were rated on a scale of 0 (not at all) to 3 (highly applicable), for the purpose of identifying the most suitable only those rated 2 and 3 are provided in the Table.
Table 8.4: Livestock Technologies Technology & Description Function/Benefit to Farmer Skill Level Required Mechanisation Small-scale implements and tractors: New Farmers benefit from modern Medium generation of farming implements and mechanisation and large leaps in tractors tailored for small-scale farming. productivity even though they farm at small scale, and at a much lower cost compared to conventional implements used by large commercial farmers. Precision farming, integrated farm management systems and software Precision farming: Gaining real-time or Optimising and tailoring production levels High exact information within particular parts of at precise and small-area level so that a single field e.g. moisture and nutrient yield is maximised and inputs are levels, soil type and depth etc., to minimised. determine the most appropriate rate of application of water, fertilizer and to adjust implement settings automatically and instantly. Precision farming can also be applied to animal production, aquaculture and agroforestry systems. Integrated farm management software: Maximise profitability and efficiency High Combines information and management automate some management and systems from various on- and off-farms administrative tasks. Coordinate and sources to coordinate farming activities in a simplify management processes. highly efficient manner. Includes a variety of technologies e.g. farm asset tracking
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Technology & Description Function/Benefit to Farmer Skill Level Required systems, cloud computing, record keeping, accounting, mapping, water and soil management, weather forecasting etc. Plan-A-Head Beef Management System: Integrate with the systems of cattle High Herd management and record keeping breeder societies and with other Plan-A- according to ICAR (International Head farming software to allow for whole- Committee for Animal Recording) farm enterprise management. Widely guidelines specifically for South African adopted therefore most software bugs beef cattle farmers. has already been fixed. The light edition is particularly suitable for small-scale farmers. Particular strong features include the program's record keeping capabilities, especially regarding animal health, reproduction and feeding. SimJunior: Basic financial management Easy to use. Ideal for the small-scale Low and accounting software for the small- farmer scale farmer. Accord: Complete human resource Particular strong features of the system Moderate management system for farmers, including include its simplicity and coverage of payroll, HR record keeping and basic employment legislation. administration. Agribeef: Complete beef cattle herd Approved by most breeder societies. Moderate (commercial as well as stud) management Particularly strong in record keeping and system). reproduction management. Feedlot: Feedlot management system for Particularly strong in record keeping. Moderate camp groups, sales groups and purchase groups. Studmaster Beef: A comprehensive Particularly strong in animal breeding. Moderate computer program for the management of beef cattle of any breed, focusing more on the breeding side of the herd than the financials. Fully incorporates registration and performance testing. Groundwater access via wells or boreholes Manual well digging or borehole drilling: Gain access to groundwater resources Low to Although mechanical drilling can reach much more cheaply compared to medium depths of 150 meters, it is generally too conventional mechanical drilling. expensive for small-scale farmers. In case the groundwater table are less than 45-
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Technology & Description Function/Benefit to Farmer Skill Level Required meter-deep and the subsoil material are soft, manual drilling or well digging are a cost efficient option. Animal Reproduction Artificial insemination (AI): Introduction of A farmer can cost efficiently introduce Moderate the sperm (often stored and transported in generically superior traits into his/her herd a frozen form) into a female animal's uterus or flock without having to buy these (in-vivo fertilization). superior animals. Oestrous synchronization: Using hormone Pregnant cows and later their calves can Moderate treatment to ensure that female dairy and be handled in a single cohort, thereby beef cattle becomes pregnant at increasing efficiencies of scale and approximately the same time. decrease cost and effort performing procedures through the different life stages. Animal Handling Hydraulic cattle clamps: Silent, less stressful During cattle handling, the traditional Low and precise clamping of cattle at the neck clamp causes significant stress to the to allow for safe handling of the animal. animal and the clamp often fit too loose or too tight. The new generation hydraulic clamps fits more precisely and does not produce a stress-causing noise.
Cattle hip-clamp: Instrument that allows for Allows for convenient, stress and injury Low easy lifting of cattle. free lifting of sick cattle or cattle that need assistance to stand upright again. Animal Feeding Rolling molasses lick: A tank filled with Ensuring a fresh supply of molasses as Low molasses with wheels that rotate through needed by the animals. the molasses at the bottom of the tank as the cattle lick the fresh molasses at the top of the tank.
Feed mixers with advanced feed Requires significantly less energy and time Moderate circulation capability: The new generation compared to conventional hammer mills. to high feed mixers are capable of circulating material that needs to be milled into a feed mix towards the centre of the container.
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Technology & Description Function/Benefit to Farmer Skill Level Required Animal Watering Auto-refill watering troughs: Water troughs Not only steady and easy to clean, but Low fitted with a small reservoir and low pressure also re-fill automatically from a small floating valves to enable automated re- build-in reservoir which minimizes filling. contamination and risk of wastage. Animal Health Vaccination: Vaccines contains inactive Vaccines have a highly positive effect on Low parts (usually the capsid) or molecules that disease control and even eradication. resembles surface proteins of a pathogenic Very high return on investment. virus or bacterium, which are introduced into the animal's blood stream so that antibodies can be developed. This will enable the animal to develop immunity and to be protected against the pathogen when and if exposed to it later in life. New vaccines are constantly developed therefore it is important to consult with an animal health professional on the most appropriate vaccination program. Antibiotics: Have two main applications in Increased growth rate and resistance High agriculture: 1) To treat infections, which is against disease in case of routine feeding an important technology but will not be supplementation, however, the cost to discussed in detail because it is a society could be large and devastating. specialised field that are taken care of by animal health professionals, and 2) As a routine feed supplement to animals in intensive farming systems (feedlots, piggeries, chicken houses, fisheries etc.) which can be considered a dangerous and unsustainable practice. Veldt Management Bush-to-feed converter: Unit that produce Converts a liability (bushes that reduce Moderate feed pellets from shrubs and trees, the carrying capacity of the veldt) into a including species responsible for bush valuable asset (feed for game and encroachment. cattle). Could be an effective method of bush encroachment control. Land rehabilitation techniques: May differ in Stabilise soil, control or reverse erosion Low to technological complexity from as simple as damage and restore degraded land so medium brush packing to as complex as that it can again be utilised for
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Technology & Description Function/Benefit to Farmer Skill Level Required biodegradable or long lasting soil cloths agricultural purposes. and mesh materials. Farm Energy Wind energy: Wind energy has been used Wind is a renewable form of energy and High for a long time in South Africa in the form of some areas in South Africa do have wind pumps. New generation wind sufficient wind development potential, technology allows for uses beyond wind especially when micro-climatic and small- pumping, including electricity generation area topographic factors are considered at micro or farm level scale. which is appropriate for very small-scale operations. Less vulnerable to theft compared to solar panels. Solar technology incl. photovoltaic and Solar is a renewable form of energy and Low thermal panels and solar drying and most areas in South Africa do have cooking: There are two main forms of solar sufficient wind development potential. In energy harvesting, i.e. photovoltaic panels fact, some parts of the southern and that produces electricity, and thermal solar western Free State, western Limpopo, panels or tubes that heat water. Solar Gauteng and especially the Northern energy is also widely used on farms for solar Cape and North West have excellent drying and solar cooling. solar power potential even at global standards. Biogas fermenters: Biogas can be Enable the farmer to become Medium produced from a variety of on-farm independent of imported and sources, especially animal dung of animals increasingly expensive mineral or natural kept in confined areas. Can be used in the gas. Especially suitable for intensive same way as conventional petroleum livestock, pig and poultry farmers which derived or natural gas. produce large quantities of animal waste. New techniques enable even small farmers with just a few animals to produce gas in a viable manner. Farm protection, security and visual monitoring Video and photographical technology: Valuable to monitor veldt condition, Medium Fixed point photography, security camera effects of grazing or fire control regime, systems and remote sensor-triggered rehabilitation efforts, and to monitor photography. animal or criminal activity in remote parts of the farm. Some systems notify the farmer by SMS of sensed activity and immediately send the footage by MMS or video clips to the farmer's mobile device (in additional to conventional recording
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Technology & Description Function/Benefit to Farmer Skill Level Required and storage of images or video). Apps for mobile phones and tablets The Merck Veterinary Manual Mobile App, Comprehensive animal health and High available for both Android and Apple. It reproduction reference not only to vets contains guidelines for the diagnosis, but to farmers as well. treatment, and prevention of animal disorders and diseases. Cattle breeds: Overview of the world's more Useful for the new farmer to help in breed Low important beef and dairy cattle breeds selection. and their characteristics. Online and mobile information portals AgriSuite Online: Internet based agricultural The system can be accessed on a PC or Low information system developed and Mac, on tablets and smartphones, in the maintained for farmers. Provide a variety of office or on the farm. Contains the most general agricultural information directly to essential, useful and concise information farmers. in a very simple and user-friendly format. FAO Ecocrop: Provide detailed crop Enable the farmer to select suitable crops Medium requirement information for almost any to farm with, and to diversify the farm's crop that are cultivated throughout the enterprises. world, including its uses and requirements for temperature, rainfall/water, soil type, soil depth, soil pH, salinity, altitude etc. It also includes hundreds of forage crop species for extensive animal farmers. Other Drones: Un-manned aircraft capable of Very useful for general inspections, High exploring the farm and taking photos from monitoring and mapping. Advanced the air. models can even perform some remote sensing functions. Remote sensing: Interpreting satellite Enable the farmer to make well informed High images to make farming decisions. Satellite decisions based on information that images provide valuable information on otherwise would have been too difficult or biomass production, soil and air mass expensive to obtain. Provides complete temperature, soil moisture, plant stress information of the entire farm. Some levels, fire warnings etc. information is provided daily or instantly. Integrated weed and pest management Usually much more effective and Medium to incl. biological control agents: Pests and sustainable than chemical control on its high weeds are major threats to farmers and own. food security. Chemical control has been
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Technology & Description Function/Benefit to Farmer Skill Level Required effective for some pests and diseases but it is expensive and causes harm to human health and the environment. Consumers and governments locally and to export markets place increasing pressure on farmers to adopt integrated management practices to reduce reliance on only chemical control. Especially important is biological control where the natural enemy of the weed or pest are released locally to control population levels. It is not only applicable to crop farmers but to all extensive and semi-intensive animal farmers as well (pasture or veldt management). Radio frequency identification technology: Know where the animal is at all times, and High Used to track and identify animals. to identify a particular animal instantly for record keeping and management purposes. Especially useful to extensive farming systems and game farmers.
8.6 Demand and Needs Analysis
The most important marketing channels and channel related opportunities include custom processing arrangements with red meat abattoirs combined with contract farming directly for government institutions, hospitality industry and especially large retailers. Gaps in the market for red meat products are mainly limited to simple value adding techniques, including improved slaughtering, portioning, branding (huge scope for further development), packaging and freezing, and to some degree market development for red meat offal products. Extensive processing is not recommended during the establishment phase due to global competition and high capital expenditure. It is possible to provide an estimate for demand based on historical consumption figures and populations. The Table provides a summary on estimated demand on a national and provincial level.
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Table 8.5: Estimated Demand for Beef Area of Demand Estimated Demand for Beef (tons) South Africa 1 017 245 Mpumalanga 79 514 Nkangala District 20 242 Ehlanzeni District 25 440 Gert Sibande District 33 832
The average annual per capita for beef is estimated to be 18.51 kg. The demand for beef in Mpumalanga is an estimated 8% of the total demand in South Africa (79 514 tons).
8.7 Socio-Economic (Job Creation) The production of beef cattle, like any of the other agricultural activities has an impact on the socio-economic development of South Africa. A critical aspect among socio-economic develop is that of job creation. The provision of job opportunities by the beef industry is crucial because this results into opportunities to receive an income that will contribute to socio economic-development in terms of eradication of poverty, food security and ultimately the uplifting of livelihoods. The government, including DAFF and DRDLR have supported and exploited the opportunities of the beef production socio-economic impact by initiating various programmes that ensure that the poor and rural communities can benefit from these opportunities
There are an estimated 50 000 commercial livestock farmers, 240 000 small scale farmers and 3 million subsistence farmers. According the Department of Agriculture, the beef industry employs an estimated 500 000 people and almost 2.1 million people are dependent on the livestock industry.
Cattle farming is a non-labour intensive activity, however, cattle farming has been identified as having high growth potential for employment creation by the Bureau for Food and Agricultural Policy (BFAP). The following job categories reveal some of the primary job opportunities that are involved in beef production:
General labourer Transfer, sorting and loading of Liarage worker carcass Processing Technical and foreman supervision Hygiene management
(Source: Red Meat Abattoir Association)
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8.8 Contribution to Food Security Food security entails ready access to food that is of sufficient standard and amounts. The beef industry, as part of the livestock sector contributes to food security, as well as provides support to the livelihoods of almost a billion people around the world. Furthermore, 15 % of total food energy and 25% of dietary protein is provided by livestock produced (RSA DAFF: 2013). In South Africa, the limited opportunities for crop production have resulted in livestock farming being the prime income generator in many of the rural areas and climatic zones, thus contributing to the income used to purchase maize, wheat and vegetables as staple foods.
A significant contribution by animal food products is towards the quality of the diet. When compared to grain or vegetable products, the biological value of animal product proteins is higher. Vital nutrients are also supplied mainly by animal food, proving nutrients such as Vitamin A and Iron that are usually insufficient in diets of the rural population. (NDA: 2006)
8.9 Regulatory Requirements There are numerous legislation documents governing the production of red meat. These range from regulations as to the production inputs (National Water Act), to those governing production (Meat Safety Act) and to production standards and consumption. The most pertinent of the acts are contained in table 44 below.
Table 8.6: Regulatory Requirements Act Description Conservation of This Act provides for control over the utilisation of natural agricultural resources in Agricultural order to promote the conservation of soil, water sources and vegetation, and the Resources Act, combat of weeds and invader plants (Department of agriculture, Forestry and 1983 (Act No. 43 Fisheries, 1963). Of 1983) Implication: The Agri-Park will be required to implement policies that will maintain and monitor best agricultural practices to ensure the conservation of soil and vegetation, and also combat invader plant species. Animal Diseases The Act provides for control measures for the prevention of diseases and parasites Act, 1984 (Act No. and for schemes to promote animal health (Department of Agriculture, Forestry 35 Of 1984) and Fisheries, 1983). Implication: The Agri-Park needs to be aware of various animal diseases and the relative prevention measures necessary. The AP will be required to implement an animal health and monitoring programme to ensure the health of the broilers. Abattoir Hygiene This Act provides for the maintenance of proper standards of hygiene in the Act, 1992 (Act No. slaughtering of animals and in the handling of meat and animal products 121 Of 1992) (Department of Agriculture, Forestry and Fisheries, 1992). Implication: The Agri-Park will be required to implement a hygiene and monitoring
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Act Description programme to ensure hygiene standards are met in the abattoir facility. Livestock Brands The Act regulates the registration of a brand in the name of an owner of livestock Act, 1962 (Act No. for the purpose of identifying the livestock (Unknown, 1993). 87 Of 1962) Implication: It will be the responsibility of the Agri-Park management to register a brand in the name of the Agri-Park in order to identify livestock within the programme. Animals The act encompasses the prevention of cruelty towards animals. The act further Protection Act, encompasses the code of best practices for the handling and transport of 1962 (Act No. 71 livestock (Unknown, 1962). of 1962) Implication: The Agri-Park must ensure that no cruelty towards it livestock occurs through their handling (transport, feeding, housing, etc.). Fertilisers, Farm The act provides for the appointment of a Registrar of Fertilizers, Farm Feeds, Feeds, Agricultural Agricultural Remedies and Stock Remedies; for the registration of fertilizers, farm Remedies and feeds, agricultural remedies, stock remedies, sterilizing plants and pest control Stock Remedies operators; to regulate or prohibit the importation, sale, acquisition, disposal or use Act, 1947 (Act No. of fertilizers, farm feeds, agricultural remedies and stock remedies; to provide for 36 of 1947) the designation of technical advisers and analysts; and to provide for matters incidental thereto (Department of Agriculture, Forestry and Fisheries, 1947). Implication: The Agri-Park must ensure that all regulations regarding the manufacturing, distribution, importation, sale, use and advertisement of any fertilizers, animal feeds, pesticides, stock remedies as well as the operation of any pest control operators are adhered to. This can be done through the farmer support units which will need to have a programme in place for the above mentioned to be monitored. National Water This act encompasses laws relating to water resources and the use thereof Act, 1998 (Act (National Water Act, 1998 (Act No.36 of 1998), 1998). No.36 Of 1998) Implication: The Agri-Park must ensure that water used is used in a sustainable way to ensure the sustainability of the nation’s water resources. Occupational The act aims to provide for the health and safety of persons at work and the health Health and Safety and safety of persons in connection with the activities of persons at work and to Act, 1993 (Act establish an advisory council for occupational health and safety (Department of No.85 of 1993) Labour, 1993). Implication: The Agri-Park must ensure that a safe working environment is established for all workers and must adhere to all the duties as listed in the occupational health and safety act. Basic Conditions The act encompasses those regulations associated with fair labour practices of Employment (Depart of Labour, 1983). Act, 1983 (Act No. Implication for AP: The AP must ensure that fair labour practices are followed to 3 of 1983) ensure that the basic conditions of employment are met, such as leave, working time, termination of employment etc.
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Act Description Municipal By-Laws Municipal by-laws will need to be investigated with regard to the establishment and Regulations, of the abattoir in a municipal area. (where relevant) Implication: The Agri-Park will not be able to operate an abattoir unless any by- laws regarding abattoirs are met. Marketing Act, The Act has authorised an establishment and enforcement of regulatory 1968 (Act No. 59 measures to intervene in the marketing of agricultural products, including the of 1968) introduction of levies on agricultural products (Department of Agriculture, Forestry and Fisheries, 1968). Implication: The Agri-Park should establish a programmes that will manage the marketing of its own products in order to meet the requirements of the Act. Agricultural The act controls and promotes specific product standards from mainly a quality Products point of view for local as well as export purposes. A list of products for which Standards Act, standards have been set through regulations is promulgated under the act by the 1990 (Act No. 119 minister of agriculture (Department of Agriculture, Forestry and Fisheries, 1990). of 1990) Implication: Food and its associated products will go through various agro- processing activities before being a marketable product. To maintain quality assurance, it is recommended that the Agri-Park establishes a team that will be responsible for carrying out activities that will meet the requirements of the Act Stock Theft Act, This Act encompasses those laws associated with the theft of animal stock and 1959 (Act No. 57 produce (Department of Justice, 1959). of 1959) Implication: The act will assist the Agri-Park in recovering any stolen produce. Consumer To promote a fair, accessible and sustainable marketplace for consumer products Protection Act and services and for that purpose establish national standards relating to (Act No68 of 2008) consumer protection (National Consumer Tribunal, 2009). Implication: The act indicates that the Agri-Park has a responsibility to provide products which promote a fair, accessible and sustainable marketplace for the consumer The Food Safety The FSSC 22000 Food Safety System Certification provides a framework for Management effectively managing your organization's food safety responsibilities. FSSC 22000 is System FSSC fully recognized by the Global Food Safety Initiative (GFSI) and is based on existing 22000 Certification ISO Standards. It demonstrates your company has a robust Food Safety Management System in place that meets the requirements of your customers and consumers (FSSC 22000, 2015). Implication: By complying with the Food Safety Management System FSSC 22000 Certification the Agri-Park is ensuring that it products meet required standards thus meeting requirements of both the customer and consumer. Hazard Analysis HACCP is a management system in which food safety is addressed through the and Critical analysis and control of biological, chemical, and physical hazards from raw Control Points material production, procurement and handling, to manufacturing, distribution (HACCP) and consumption of the finished product (U.S Food and Drug Administration,
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Act Description 2015). Implication: By ensuring that food safety requirements are met the Agri-Park is taking into account the needs of both the customer and consumer as well as enabling a safe and hazard free work environment. Conservation of This Act provides for control over the utilisation of natural agricultural resources in Agricultural order to promote the conservation of soil, water sources and vegetation, and the Resources Act, combat of weeds and invader plants (Department of agriculture, Forestry and 1983 (Act No. 43 Fisheries, 1963). Of 1983) Implication: The Agri-Park will be required to implement policies that will maintain and monitor best agricultural practices to ensure the conservation of soil and vegetation, and also combat invader plant species. Perishable This Act provides for the control of perishable products intended for export from Products Export the Republic of South Africa and for the continued existence of a statutory board Control Act, 1983 to bring about the orderly and efficient export of perishable products from the (Act No. 9 Of Republic (Department of Agriculture, Forestry and Fisheries, 1983). 1983) Implication: In the event of export, it is imperative that the Agri-Park establishes and maintains control over the export products. It is the onus of the Agri-Park to establish a team that is responsible for food health and safety regulations. Agricultural This Act provides for the establishment of and control over an agricultural Development development fund for the handling of money received for development Fund Act, 1993 (Unknown, 1993). (Act No. 175 Of Implication: Funding is a fundamental cornerstone to the development of the 1993) Agri-Park and its stakeholder. The Agri-Park management should play an intermediary role in accessing and use of such funding. Agricultural Credit The Act provides for a system of assistance to persons carrying on or undertaking Act, 1966 (Act No. to carry on farming operations, and control in respect of assistance rendered 28 Of 1966) (Unknown, 1993). Implication: The Agri-Park management should provide a service to its producers in the way of easing access to credit. The AP should, on behalf of the producers, assist in accessing credit for agricultural production purposes. Access to credit will allow producers access to the relevant inputs for agricultural production purposes and, as such, produce necessary products for the AH (marketing point). Livestock The Act regulates the collection and sale of semen and ova and the artificial Improvement Act, insemination and inoculation of certain animals, establishment of a system for the 1977 (Act No. 25 evaluation and certification of the performance of certain animals, quality control Of 1977) with regard to the importation and exportation of certain animals, semen, ova and eggs, incorporation of livestock breeders' societies and the maintenance of the legal personality of livestock breeders' societies, and granting of certain exclusive powers relating to the registration of pedigrees of certain livestock to the South African Stud Book and Livestock Improvement Association (Unknown,
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Act Description 1993). Implication: Improving livestock, in particular broilers, is integral in terms of production efficiency. It is thus recommended that the Agri-Park establishes committees and programmes that address issues of livestock improvement in order to maintain standards as set out by the Act.
8.10 Substitute Products and Services Substitute goods/products are goods which, as a result of changed conditions, may replace each other in use, or consumption. The Table below lists and describes potential substitutes beef: Table 8.7: Beef Substitute Products Substitute Product Description High protein Consumers have a choice of consuming high protein vegetables, grains, or vegetables/grains legumes. Examples of high protein products include lentils, soy mince, tofu and / legumes samp and beans. Proteins of this nature are considered affordable alternatives and are particularly popular amongst vegetarians. Other meat Consumers are likely to substitute price rather than taste, or preference within this category. Low income consumers, therefore, are likely to purchase cheaper meat alternatives when substituting beef. Examples might include offal, cheaper pork, chicken and other meat that are relatively cheap. Eggs Eggs are a cheap, and a high protein source and therefore a potential substitute, especially within low income households.
Depending on the availability of a consumer’s disposable income, the substitution effect may differ. A high income consumer, for example, will base their purchase decision of taste and preference, while a lower income consumer may base their decision to purchase based on price. As a result, a low income consumer may substitute for cheaper protein products, rather than more expensive protein products such as mutton.
8.11 Societal and Cultural Trends Societal and cultural trends are trends that relate to the social and cultural values and practices within a society, or culture. These are long term trends (at least two to five years) that explain why people behave the way they do. The South African food industry’s direction is affected by the growing influence of demographics, especially with respect to societal and cultural trends. The trend in rising incomes within South Africa has provided the local consumer with increased purchasing power and, therefore, the ability to increase demand for food. Increased purchasing power has also allowed the consumer increased access to a variety of food, including processed, packaged and frozen red meat (or convenience foods as
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described below). Convenience foods or also known as time-saving foods as they are partially, or complete prepared are increasing in demand as consumers spending power increases and more value is given to time-saving. Red meat specific convenience foods include microwave meals and already prepared dishes for the oven. The increasing demand of quick-food has increased the number of quick-food items available to consumers in the last two decades. The most likely consumers to buy these items include modern families (families that lead an individualistic lifestyle and do not sit down to as many traditional meals), middle- to high-income families, and younger families.
There has been a growing trend in terms of purchasing organically grown food. Organically grown red meat provides consumers with produce free of:
Less fat; More flavour; No GMO (Genetically Modified Organism); No hormones, antibiotics and drugs; Preserves ecosystem; Keeps children and future safe. Keeps children and future safe.
Non GMO red meat is growing in popularity. A variety of health risk have been attributed to GMO, such as organ damage, fertility, tumors, etc. (however these effects were noted under laboratory conditions). There are public concerns regarding GMO in terms of food safety, regulation, labelling, as well as environmental impact. Genetically modified crops grown in South Africa are pre-dominantly white maize, yellow maize, cotton and soya. Livestock (cattle, beef and pork) play a vital role in terms of economic, social and cultural in communities. Their significance includes contribution to food security, job creation, income, nutrition, “live banks” for immediate cash needs, milk, manure, traditional ceremonies, rituals and social status to small scale and emerging farmers. This is especially true in marginal and remote areas with poor agricultural lands and minimal economic opportunities.
Small scale and emerging farmers in the informal market are generally supplied by communal farmers, who in terms of location, are far from any formal market. Informal markets include farmer-to-farmer or farmer-to-consumer and/ or farmer to unregistered buyer sales. Key players in the informal food chain include communal area farmers, auctioneers, speculators and local traders. Two important reasons for keeping cattle for example were income generation and for family consumption. Young small scale farmers indicated that preference was given to
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selling of livestock through abattoirs and auctions rather than through private sales and speculators, while older small scale farmers who have low education and mistrust the carcass classification system shun abattoirs as a result.
In South Africa offal is eaten by South Africans of different backgrounds. Offal refers to the internal organs and entrails of a butchered animal, however in SA sheep heads are very popular and are referred to as “Skopo” (township colloquial term meaning head) and smiley (refers to the expression of the head when cooked). Additionally, in SA Halaal food has become increasingly popular due to the growing Muslim population. Halaal food implies that for any food to be considered Halaal it must comply with the religious ritual and observance of Sharia law.
8.12 SWOT Analysis Table 8.8: SWOT Analysis – Beef BEEF
Foot and mouth disease free area SA traditions and customs Food safety
Strengths Quality assurance
Small scale livestock farmers do not have sufficient access to credit, transport and storage
infrastructure as well as markets High transport costs and processing costs Lack of funds for small scale and emerging black farmers
Weaknesses Farm and livestock management Insufficient herd size Production of premium cuts and prepared meats
Skills development programmes Spin off opportunities for further agro-processing facilities, such as bone for fertilizer, hides, etc. Availability of emerging farmers
Opportunities Export opportunities
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BEEF Market concentration Increasing production/input costs within the value chain (feed grain, administration and transport) Stock theft
Overgrazing Lack of infrastructure and extension services to small-scale producers in former homelands
Threats Lack of new market development for small-scale producers in former homelands Failure to manage natural disasters such as veld fires and predators Lack of compliance and enforcement of existing legislation Climate change affecting production
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9 Commodity Analysis – Maize 9.1 Market Assessment The South African maize market has matured considerably since deregulation of agricultural marketing. Producers, traders and other intermediaries interact freely in the marketing of maize. Most of the maize produced in South Africa is consumed locally and as a result, the domestic market is very important to the industry. Before deregulation the maize price was set by the marketing boards. The price was set lower at around R300/ton. Since the implementation of deregulation policy the price of maize increased gradually because of the adoption of perfect competition in the maize marketing environment in which the prices are determined by market forces i.e. supply and demand factors.
As maize is an internationally traded commodity, it is also subjected to the international market conditions. The demand and supply conditions of maize in the international market influence domestic prices directly. Another important factor that impacts on the domestic market is the import tariff, which is used to protect domestic producers from lowly priced maize imports. Whilst prices have generally been on an increasing trend over the past decade, it has also fluctuated substantially in aligned to supply and demand issues. The lowest average maize producers price was recorded in 2004/05 (R513/ton) and the highest was recorded in 2011/12 (R2144/ton).
9.1.1 Specific local marketing channels
There are a number of marketing channels to which farmers can sell maize, including: Silos and large regional service cooperatives and farmer support businesses (often originally started as cooperatives e.g. Senwes, Afgri etc.) Grain, oilseed, milling by-product and other commodity crop traders Futures and options contracts (SAFEX) Grain millers Animal feed manufacturers incl. larger animal farmers who produce their own feed formulations
Not all of the above mentioned marketing channels are suitable for the Agri-Park due to high risks being associated with certain channels (such as futures and options contracts) or barriers to entry (such as grain millers do not buy directly from farmers).
The Table below lists the marketing channels with the most opportunities for maize farmers in Nkangala District.
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Table 9.1: Opportunities – Maize Marketing channel Priority & gaps/opportunities Silos and large regional service cooperatives Very high priority because of ease of access and and farmer support businesses (often originally low barriers of entry. Throughout the district a silo is started as cooperatives e.g. Senwes, Afgri etc.) within reasonable distance. Animal feed manufacturers incl. larger animal Very high priority because there are a number of farmers who produce their own feed potential buyers in or nearby the district, and this formulations channel may be a means to reduce transport costs.
9.1.2 Global Markets
As record harvests continue to materialise in key production regions, global maize production is set to reach record levels for the 2nd consecutive year in 2014/15, despite a reduction in area planted. Having already plummeted by more than 30%from 2013 highs, maize prices are projected marginally lower again in 2015, inducing a further consolidation of maize area in 2016. Despite the projected lower plantings and a return to more normal yields, prevailing stock levels remain high and consequently, lower prices will be sustained in the short term. A gradual recovery is expected towards 2020, as global maize demand, driven largely by the animal feed market, rises above production levels. Barring extreme weather conditions, world production is projected to overtake the growth in demand again towards the end of the baseline period, which may result in marginal decline in international prices.
9.1.3 Exports
The above global market perspective is very important since the maize industry is an important earner of foreign exchange through the export of maize and maize products. In 2013 we exported approximately 2 million tons at a value of R 4 billion rand. The South African maize industry exports maize mostly to African countries particularly BLNS (Botswana, Lesotho, Namibia and Swaziland) countries, Zimbabwe, Kenya, Mozambique, Zambia, and Mauritius. In recent years there has also been substantial export to Asia (especially Japan) and to Europe
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9.2 Value Chain Assessment Diagram 9.1: Maize Value Chain
Input Resources Plant Material
Production
Harvesting
Handling
Storage Traders
Transport & Distribution
Export Animal Feed Co-operatives Maize Milling Other Processors
General Wholesale Other Private
Retailers Small Shops Tuck Shops
Consumers
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9.3 Agro-Processing In light of the fact that South Africa has remained a net exporter of maize for several seasons and is projected to remain in a net exporting position over the coming decade, BFAP recently undertook a study for the Maize Trust related to the potential of the domestic value chain to grow and diversify the production of value added goods. Traditionally, leading maize consumers such as the United States exhibit greater diversity in the consumption structure, whereas in South Africa, the bulk of maize is utilised as animal feed (38.4%) and food (36.1%) products. Exports accounted for 17.3% of the 2013/14 maize crop in South Africa, with the balance of 4.6% being utilised in the production of starch and glucose (Figure 4.5).
In the United States, biofuel production (38.2%) and animal feed (37.5%) accounts for the bulk of the domestic market, with exports accounting for 14.3%of domestic production. The remainder of the stock is used to produce products such as: starch, glucose and dextrose (3.9%); high-fructose corn syrup (3.6%); food and cereal products (2%) and alcohol for beverages and manufacturing (1%). Although the United States is a highly developed economy, the diversified nature of U.S. maize consumption raises the question of whether the South African maize value chain is optimally developed.
South Africa’s potential to add value to the currently exported surplus maize through the expansion of the food, animal feed, ethanol, maize starch and glucose-fructose syrup markets reveal the potential tonnage that could be added to the various marketing channels as follows: Exports: BFAP projects that maize exports will decline from 2.23 million tons to 1.96 million tons between 2013/14 and2023/24. The main driver of this reduction is that growth in domestic demand for maize (especially yellow maize) will marginally outpace production growth. Feed consumption: Rising demand for animal based products is projected to drive feed demand growth by 2.3 million tons from its current level of 4.8 million tons to just over 7 million tons between 2014/15 and 2023/24. Assuming that 370thousand tons of dark poultry meat imports could be substituted by 370 thousand tons of white poultry meat exports, a further 410 thousand tons7 of maize could potentially be consumed by the South African poultry industry. Food: Due to the limited growth in the demand for maize-based food products, BFAP estimates that food consumption will continue to trend sideways over the next decade, only expanding by 90 thousand tons by 2023/24. Starch and glucose: Assuming the country utilizes the available 20% wet-milling capacity, a further 150 thousand tons of maize can be used in the production of starch
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and glucose products. Glucose-Fructose Syrup (GFS): Industry sources indicated that between 350-400 thousand tons of sugar is consumed by the South African beverage industry. Under the following assumptions, BFAP estimates that 581 thousand tons of maize can be consumed should GFS replace 350 thousand tons of sugar in the domestic beverage industry: - 1 ton of GFS replaces 1 ton of raw sugar, based on the perfect rate of substitution observed in the US between 1977 and 1988 (USDA ERS, 2015), - 1.66 tons of maize are required to produce 1 ton of GFS (Gray, 1991). Ethanol: Maize is currently excluded as a feed stock within the South African Biofuels Industrial Strategy (BIS) due to food security concerns. Until such time that maize is included as a production crop in the BIS, it is not possible to legitimately produce maize- based ethanol in South Africa and the potential market space is therefore nought.
Total Potential: In light of the above, the total additional space in the domestic market for maize in 2023/24 is estimated at 3.46 million tons (excluding the potential 410 thousand tons that could be consumed under a poultry export scenario).
The following are possible value adding opportunities that may be considered: Milling and maize meal Corn steep liquor Packaged popcorn Glucose and Glucose-Fructose Syrup (GFS) Popped maize cakes Fermented beverages Reconstructed maize chips Ethanol Starch Animal feed
9.4 Main Input Suppliers Seed suppliers include: Monsanto Sensako Pannar Pioneer Hybrid International 9.5 Competitors The major national role players in maize processing for human consumption includes: Pioneer Food Group (Pty) Ltd Premier Foods Ltd Pride Milling Company (Pty) Ltd Ruto Mills (Pty) Ltd
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Tiger Brands Ltd
In terms of the animal feed industry, role players include: AFGRI Meadow Feeds Bokomo Voere Noordwes Voere Epol Senwesco Voere KK Animal Nutrition
9.6 Stakeholders The Table below lists the stakeholders in the maize industry in Nkangala District.
Table 9.2: Maize Stakeholders Name Type Afgri (Emalahleni) Cooperatives SA Feed and Grain Cooperatives Kwamhlanga Regional Office Department of Agriculture Middelburg Department of Agriculture Department of Agriculture Alzu Feeds (Delmas) Feed Manufacturers Alzu Feeds (Emalahleni) Feed Manufacturers Alzu Feeds 1 (Middelburg) Feed Manufacturers Kanhym Estates Ltd Feedlots Ranch Estates Feedlot (PTY) Ltd Feedlots SKS Boerdery Feedlots SA Feed and Feedlot Feedlots Afgri (Middelburg) Millers Blinkwater Meule (Dullstroom) Millers Blinkwater Meule (Middelburg) Millers Hendrina Meule and Veevoer Millers Isiswe Mills (PTY) Ltd Millers Pride Milling (Ogies) Millers Schoeman Boerdery (EDMS) BPK Millers Afgri Silo (Eloff) Silos Afgri Silo (Middelburg) Silos Afgri Silo (Ogies) Silos Afgri Silo (Stoffberg) Silos Afgri Silo (Wonderfontein) Silos Schoeman Boerdery (Delmas) Silos
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9.7 Technology Technology plays a vital role in the development of the agricultural industry and today farmers use technology to assist in producing food for a growing world. High tech advances have been assist in making farming life easier and more profitable. Smaller farmers can hold their own by moulding the technology to fit their management techniques and needs.
The Table below indicates the various technologies that the Agri-Park can use within Nkangala District. By utilising the various technologies, the small scale and emerging farmers can improve on the production of the variety of livestock farmed and ultimately increase their profit.
The technologies were rated on a scale of 0 (not at all) to 3 (highly applicable), for the purpose of identifying the most suitable only those rated 2 and 3 are provided in the Table.
Table 9.3: Technologies – Maize Farming Technology & Description Function/Benefit to Farmer Skill Level Required Mechanisation New generation small hand tools Many farming activities, especially Low repetitive day-to-day work, can be greatly enhanced by hand tools designed for the particular task, speeding up production and reduce health and safety risk (e.g. back strain, wearing of joints and skin, etc.). Small-scale implements and tractors: New Farmers benefit from modern Medium generation of farming implements and mechanisation and large leaps in tractors tailored for small-scale farming. productivity even though they farm at small scale, and at a much lower cost compared to conventional implements used by large commercial farmers. Precision farming, integrated farm management systems and software Precision farming: Gaining real-time or Optimising and tailoring production levels at High exact information within particular parts of precise and small-area level so that yield is a single field e.g. moisture and nutrient maximised and inputs are minimised. levels, soil type and depth etc., to determine the most appropriate rate of application of water, fertilizer and to adjust implement settings automatically and instantly. Precision farming can also be applied to animal production, aquaculture and agroforestry systems.
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Technology & Description Function/Benefit to Farmer Skill Level Required Integrated farm management software: Maximise profitability and efficiency High Combines information and management automate some management and systems from various on- and off-farms administrative tasks. Coordinate and sources to coordinate farming activities in simplify management processes. a highly efficient manner. Includes a variety of technologies e.g. farm asset tracking systems, cloud computing, record keeping, accounting, mapping, water and soil management, weather forecasting etc. Plan-A-Head Grain Management Software Integrates with other Plan-A-Head farming Medium Program with Grain Management System: software to allow for whole-farm enterprise Software that allows for total management management. Widely adopted therefore of a grain farming enterprise, from most software bugs has already been fixed. production to finance and human Particular strong features include the resource management. program's mapping, payroll and financial management capabilities. SimJunior: Basic financial management Easy to use. Ideal for the small-scale farmer Low and accounting software for the small- scale farmer. Accord: Complete human resource Particular strong features of the system Medium management system for farmers, including include its simplicity and coverage of basic payroll, HR record keeping and employment legislation. administration. Saaiplan: Software that facilitates Could serve as a base for precision Medium comprehensive planning, monitoring and agriculture. record keeping at field level for field crop enterprises. Groundwater access via wells or boreholes Manual well digging or borehole drilling: Gain access to groundwater resources Low to Although mechanical drilling can reach much more cheaply compared to medium depths of 150 meters, it is generally too conventional mechanical drilling. expensive for small-scale farmers. In case the groundwater table are less than 45- meter-deep and the subsoil material are soft, manual drilling or well digging are a cost efficient option.
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Technology & Description Function/Benefit to Farmer Skill Level Required Irrigation Systems Pre-punched drip tape: tubes comes with Low water pressure requirement. Very Very low holes already provided, therefore easy to simple and low cost. install. Button emitter irrigation: button emitters Low water pressure requirement. High are fitted to irrigation lines, which transport water directly to the root zone. Baffle pre-punched drip irrigation: Plastic Low water pressure requirement. Use 50 - 70 Very low sleeves/baffles localize water flow from percent less water compared to pre-punched holes in the drip line. conventional drip irrigation. Mini sprinkler irrigation: Low flow system Can irrigate flat and sloping land. Ideal for Very low that require less pressure and is more water hilly or sloping terrain or soils prone to water efficient than impact sprinklers and erosion, or areas planted with closely conventional sprinkler irrigation. spaced crops but water are too scarce for higher flow irrigation systems such as impact sprinklers. Impact sprinkler irrigation: higher flow Can irrigate flat, sloping and hilly terrain. Very low system that requires more pressure and Ideal for closely spaced crops on larger water compared to mini sprinkler systems. fields where water scarcity prohibits flood irrigation. Veldt Management Land rehabilitation techniques: May differ Stabilise soil, control or reverse erosion Low to in technological complexity from as simple damage and restore degraded land so that medium as brush packing to as complex as it can again be utilised for agricultural biodegradable or long lasting soil cloths purposes. and mesh materials. Soil improvement and prevention of soil erosion In-field rainwater harvesting: Small basins Enable the soil to absorb much more water Low (that can be made with a shovel) capture that would have run off the field. rainwater, preventing it from immediately Depending on the type of soil, the running off the field during a rain event. additional moisture may benefit the crop for Apart from cultivated fields, micro-basins several months and may increase yield can also be established on pastures to significantly. increase carrying capacity of animals. Farm Energy Wind energy: Wind energy has been used Wind is a renewable form of energy and High for a long time in South Africa in the form of some areas in South Africa do have wind pumps. New generation wind sufficient wind development potential, technology allows for uses beyond wind especially when micro-climatic and small-
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Technology & Description Function/Benefit to Farmer Skill Level Required pumping, including electricity generation area topographic factors are considered at micro or farm level scale. which is appropriate for very small-scale operations. Less vulnerable to theft compared to solar panels. Solar technology incl. photovoltaic and Solar is a renewable form of energy and Low thermal panels and solar drying and most areas in South Africa do have sufficient cooking: There are two main forms of solar wind development potential. In fact, some energy harvesting, i.e. photovoltaic panels parts of the southern and western Free that produces electricity, and thermal solar State, western Limpopo, Gauteng and panels or tubes that heat water. Solar especially the Northern Cape and North energy is also widely used on farms for solar West have excellent solar power potential drying and solar cooling. even at global standards. Biodiesel: Biodiesel can be generated Enable the farmer to become independent High from a variety of on-farm produced of imported and increasingly expensive sources including oil crops and rendered mineral diesel. animal fat. It can be used in the same way as conventional fossil or mineral oil derived diesel. Biogas fermenters: Biogas can be Enable the farmer to become independent Medium produced from a variety of on-farm of imported and increasingly expensive sources, especially animal dung of animals mineral or natural gas. Especially suitable for kept in confined areas. Can be used in the intensive livestock, pig and poultry farmers same way as conventional petroleum which produce large quantities of animal derived or natural gas. waste. New techniques enable even small farmers with just a few animals to produce gas in a viable manner. Farm protection, security and visual monitoring Video and photographical technology: Valuable to monitor veldt condition, effects Medium Fixed point photography, security camera of grazing or fire control regime, systems and remote sensor-triggered rehabilitation efforts, and to monitor animal photography. or criminal activity in remote parts of the farm. Some systems notify the farmer by SMS of sensed activity and immediately send the footage by MMS or video clips to the farmer's mobile device (in additional to conventional recording and storage of images or video).
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Technology & Description Function/Benefit to Farmer Skill Level Required Apps for mobile phones and tablets AgriApp: Farmer information tool for crop Useful general overview from a production Low production. perspective. Online and mobile information portals AgriSuite Online: Internet based The system can be accessed on a PC or Low agricultural information system developed Mac, on tablets and smartphones, in the and maintained for farmers. Provide a office or on the farm. Contains the most variety of general agricultural information essential, useful and concise information in directly to farmers. a very simple and user-friendly format. FAO Ecocrop: Provide detailed crop Enable the farmer to select suitable crops to Medium requirement information for almost any farm with, and to diversify the farm's crop that are cultivated throughout the enterprises. world, including its uses and requirements for temperature, rainfall/water, soil type, soil depth, soil pH, salinity, altitude etc. It also includes hundreds of forage crop species for extensive animal farmers. Other Recombinant DNA technology and Large gains in traits such as drought, salt, Low genetic modified varieties: The process of pest, pathogen or herbicide tolerance, (from the natural selection by traditional breeders superior yields, nitrogen uptake ability, taste farmer's can be accelerated by deliberate and texture etc. Particularly important to perspecti insertion of genes that code for a particular sustain future expanding populations and to ve) trait into the host organism, thereby it is compensate for climate change effects are possible to develop crop varieties that drought and salt tolerance, nitrogen have more desirable traits. metabolism and even fixation, herbicide tolerance (to facilitate weeding, a major agricultural problem) and general yield improvements. Drones: Un-manned aircraft capable of Very useful for general inspections, High exploring the farm and taking photos from monitoring and mapping. Advanced the air. models can even perform some remote sensing functions. In-field soil and crop sensors: Measure a Know exactly when to irrigate or provide Moderat variety of soil factors, most importantly additional fertilizer, and how much e to high moisture, pH, organic matter, salinity and water/fertilizer to apply. It may also indicate temperature levels. Crop sensors can the best time to harvest. sensor water stress, nitrogen and other nutrient levels.
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Technology & Description Function/Benefit to Farmer Skill Level Required No-till or conservation tillage: Land Significant cost savings in terms of diesel Low to preparation for crop production without (very energy intensive to lift the soil of an moderat tilling the land at all, or just partially entire field, especially in case of deep e breaking up of the soil. tillage). Increased moisture retention. Reduced soil erosion. Remote sensing: Interpreting satellite Enable the farmer to make well informed High images to make farming decisions. Satellite decisions based on information that images provide valuable information on otherwise would have been too difficult or biomass production, soil and air mass expensive to obtain. Provides complete temperature, soil moisture, plant stress information of the entire farm. Some levels, fire warnings etc. information is provided daily or instantly. Integrated weed and pest management Usually much more effective and Medium incl. biological control agents: Pests and sustainable than chemical control on its to high weeds are major threats to farmers and own. food security. Chemical control has been effective for some pests and diseases but it is expensive and causes harm to human health and the environment. Consumers and governments locally and to export markets place increasing pressure on farmers to adopt integrated management practices to reduce reliance on only chemical control. Especially important is biological control where the natural enemy of the weed or pest are released locally to control population levels. It is not only applicable to crop farmers but to all extensive and semi-intensive animal farmers as well (pasture or veldt management).
9.8 Demand and Needs Analysis The most appropriate channel for farmers that market collectively will eventually be to let the hub become a cooperative silo business itself (very much like the traditional “cooperatives” that evolved today into large agribusinesses such as Senwes, Afgri etc.), or to acquire a silo, which then trade in grain like any other grain trading entity.
In the short-term the most promising channels will be to supply to existing silos and/or to sign forward contracts with large feedlots, piggeries and poultry producers that are situated as
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near as possible to the production areas. Regarding agro-processing, industrial milling and production of simple snacks may be viable. As production issues are streamlined and strong relationships are built with value chain partners, more complex snacks may be considered, especially health snacks, as well as food products that contain hominy chop (“full-grain” version of maize).
It is possible to provide an estimate for demand based on historical consumption figures and populations. Table 9.4 provides a summary on estimated demand on a national and provincial level.
Table 9.4: Estimated Demand for Maize Area of Demand Estimated Demand (tons) South Africa 4 513 578 Mpumalanga 352 809 Nkangala DM 89 817 Ehlanzeni DM 112 878 Gert Sibande DM 150 115
At an average per capita consumption of maize at 82.13kg, there is a clear demand for maize and maize products in South Africa. Demand for maize on a national level, is approximately 4.5 million tons.
9.9 Socio-Economic (Job Creation)
Maize is considered a non-labour intensive field crop that is has an estimated employment multiplier, per hectare of production, of 0.01 and an indirect employment (upstream and downstream linkages) multiplier of 0.005, suggesting that 100 ha of maize would need to come into production to create a single permanent job opportunity, while 200 ha would be necessary to create an indirect opportunity.
9.10 Contribution to Food Security Maize is highly important for food security in South Africa, especially since it is part of the group of the most crucial staple foods. What makes maize an important staple food is not only the high amount that is produced, but as well as mealie meal being a significant part of South Africa’s diet.
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9.11 Regulatory Requirements Table 9.5: Regulatory Requirements Regulation Description Agricultural Regulations relating to the grading, packing and marking of maize products Product intended for sale in the Republic of South Africa. Standards Act, Maize quality is determined by official grading regulations promulgated under the 1990 (Act No. Agricultural Products Standards Act, which governs the classification and grading of 119 Of 1990) maize based on several qualitative factors. The quality of the maize destined for export is confirmed with an export certificate issued by the Perishable Products Export Control Board (PPECB) as the official assignee of DAFF. Implication: Food and food products will go through various agro-processing activities before being a marketable product. To maintain quality assurance, it is recommended that the Agri-Park establishes a team that will be responsible for carrying out activities that will meet the requirements of the Act. Fertilisers, Farm The act provides for the appointment of a Registrar of Fertilizers, Farm Feeds, Feeds, Agricultural Remedies and Stock Remedies; Agricultural for the registration of fertilizers, farm feeds, agricultural remedies, stock remedies, Remedies and sterilizing plants and pest control operators; Stock to regulate or prohibit the importation, sale, acquisition, disposal or use of Remedies Act, fertilizers, farm feeds, agricultural remedies and stock remedies; 1947 (Act No. To provide for the designation of technical advisers and analysts. 36 Of 1947) Implication: The Agri-Park, specifically through the farmer support units will need to have a programme in place that will monitor the acquisition, sale and disposal of various agricultural inputs. The programme will be necessary to ensure compliance with National Water This act encompasses laws relating to water resources and the use thereof. Act, 1998 (Act Implication: Water use, being a valued input into agricultural production, will have No.36 Of 1998) to be monitored in order to ensure its sustainable use. It is recommended that the Agri-Parks management appoint a representative body that will act as an intermediary between the Agri-Park stakeholders and various water governing bodies. This will streamline the application procedure for water use and sustainable use thereof. Conservation The Act promotes the conservation of soil, water sources, vegetation and of Agricultural combating weeds and invader plants. Resources Act, Implication: The Agri-Park will be required to implement policies that will maintain 1983 (Act No. and monitor best agricultural practices to ensure the conservation of soil and 43 Of 1983) vegetation, and also combat invader plant species
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Regulation Description Genetically The act serves to: Modified Promote the responsible development, production, use and application of Organisms Act, genetically modified organisms. 1997 (Act No. Limit possible harmful consequences to the environment. 15 Of 1997) Give attention to the prevention of accidents and the effective management of waste. Limit, evaluate and reduce potential risks. Establish a council for GMO’s Ensure GMO’s do not present a hazard to the environment. Establish appropriate procedures for the notification of specific activities involving the use of GMO’s. Implication: GMO maize may be used within the production systems of the Agri-Park and it is, therefore, the responsibility of the Agri-Parks management to ensure that GMO’s are used conservatively and sustainably Marketing of The Act aims to establish and enforce regulatory measures to intervene in the Agricultural marketing of agricultural products, including the introduction of levies. It also Products Act, establishes a National Agricultural Marketing Council. 1996 (Act No. Implication: Given the system of control over marketing of products, it is 47 Of 1996) recommended that the Agri-Park establishes programmes that will manage the marketing of its own products that meet the requirements of the Act. Plant Breeders' The purpose of the Act is to grant rights to breeders of certain kinds of plants. Right Act, 1976 Implication: The Agri-Park will not be able to use seed that is harvested from the (Act No. 15 Of crops. The Agri-Park may consider breeding programmes for the development of its 1976) own maize, in which case rights may be granted. The Agri-Park should respect the rights granted to plant breeders from who they purchase seed from Plant The Act provides for the registration of premises from which the sale of certain plants Improvement or the cleansing, packing and sale of certain propagating material may be Act, 1976 (Act undertaken. It also prescribes the conditions for such plants, or propagation material No. 53 Of 1976) to be sold and provides for a system of certification with the objective of maintaining quality. Implication: In the event that the Agri-Park breeds its own specific maize cultivars, it will need to comply with regulations as set out by the Act. Agricultural The Act provides measures by which agricultural pests may be prevented and Pests Act, 1983 combated. (Act No. 36 Of Implication: Best agricultural practices will be necessary to maintain control over 1983) pests. Agri-Parks management should develop programmes/schedules to ensure the control of pests.
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Regulation Description Occupational The Act aims to provide for the health and safety of persons at work and the health Health and and safety of persons in connection with the activities of persons at work and to Safety Act, establish an advisory council for occupational health and safety. 1993 (Act Implication: It is recommended that the Agri-Parks management appoints an No.85 Of 1993) operational task team that deals specifically with health and safety issues within the programme in order to comply with the regulations as set out in the Act Basic Encompasses regulations associated with fair labour practices. Conditions of Implication: The Agri-Park will be expected to meet the regulations set out in the Act. Employment As such the Agri-Park will need to appoint a Human Resources team that will Act, 1983 (Act manage compliance No. 3 Of 1983) Marketing Act, The Act has authorised an establishment and enforcement of regulatory measures 1968 (Act No. to intervene in the marketing of agricultural products, including the introduction of 59 Of 1968) levies on agricultural products. Implication: Given the system of control over marketing of products, it is recommended that the Agri-Park establishes programmes that will manage the marketing of its own products that meet the requirements of the Act HACCP HACCP is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product. Implication: By ensuring that food safety requirements are met the Agri-Park is taking into account the needs of both the producer and consumer as well as enabling a safe and hazard free work environment ISO Standards ISO certifies standard requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose. Implication: The onus is upon the Agri-Park to attain ISO standards in order to meet the requirements of international standards. These standards should be applied throughout the value chain.
9.12 Substitute Products and Services Substitute goods/products are goods which, as a result of changed conditions, may replace each other in use, or consumption. The Table below lists and describes potential substitutes for maize and maize products.
Maize, in many cases, is a staple household item and consumed on a daily basis, particularly in low income households. As such, maize is not easily substituted with other staples for various reasons including the price of alternatives and nutritive quality. As household income
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increases, however, maize becomes more easily substitutable as consumers have access to a greater variety of food items.
Table 9.6: Substitutes for Maize Meal Substitute Product Description Vegetables Potatoes, amadumbes and sweet potatoes, in particular, are alternatives to maize meal. Other grains & Lentils and various other grains such as rice have great potential to be cereals/beans substitutes for maize meal depending on price and nutritive quality.
Depending on the availability of a consumer’s disposable income, the substitution effect may differ. A high income consumer, for example, will base their purchase decision of taste and preference, while a lower income consumer may base their decision to purchase based on price. As a result, a low income consumer may substitute for cheaper staples, rather than more expensive staples.
A producer of maize would be able to change production given that land is has the capacity to produce a variety of products. As such, producers should be aware of market conditions and change production plans accordingly.
9.13 Societal and Cultural Trends Societal and cultural trends are trends that relate to the social and cultural values and practices within a society, or culture. These are long term trends (at least two to five years) that explain why people behave the way they do.
The South African food industry’s direction is the growing influence of demographics, especially with respect to societal and cultural trends. As such, it is important that the Agri-Park positions itself to take advantage of such trends by meeting the demands of society through the processing of relevant products. The following, vegetable specific, cultural and societal trends have been identified and described.
Rising incomes: The trend in rising incomes within South Africa has provided the local consumer with increased purchasing power and, therefore, the ability to increase demand for food. Increased purchasing power has also allowed the consumer increased access to a variety of food, including processed, packaged maize products (or convenience foods as described below).
Staple household item: Maize meal (the major ingredient for what is popularly known as pap in South Africa) is one of South Africa’s main staple food items, as is the case within many
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emerging markets. Increasingly, maize meal is being fortified with essential macro- and micronutrients in order to increase the nutritional quality of the products, given that it is a staple in many households. In addition, maize meal is a cheaper alternative to most staples and food items.
Organic Products: A new-age trend for organic products has resulted in the increased production of organic foods. The increasing demand for organic foods is a result of consumer perception that organic is healthier, more sustainable and less chemical residue is left on the product.
GMO: Most consumers are uninformed with respect to genetically modified foods and are often not aware that they may be eating GMO’s. In many cases consumer attitudes and perceptions of GM food products are fears, concern for, and avoidance of the new technology as a result of the negative connotations attached to the foods.
Maize beer (Umqombothi): The traditional South African beer used as a celebratory drink is made of several ingredients including maize. There are large quantities of the beer being produced by artisans in in an unregulated fashion which raises health concerns. As, such there is an opportunity to produce the traditional beer under regulated conditions, producing a safer product, on a potentially commercial scale that will satisfy consumer demand.
There is a growing influence of demographics, especially with respect to societal and cultural trends, on the local food industry in South Africa. As such, social and cultural trends as listed and described above should be taken into consideration when considering products that should be produced for local markets. A marketing team that possesses the necessary skills to understand the local market is integral to the Agri-Parks success in accessing local and international markets.
9.14 SWOT Analysis The SWOT Analysis for maize is contained in the Table below.
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Table 9.7: SWOT Analysis MAIZE Well-established commercial farmers. A number of informal and small farmers Well-developed infrastructure such as well-placed silos in the province
It is an important source of energy in the form of starch and fat. It is a staple food and a source of cheap energy for a large sector of the population.
Strengths The production of the grain crops provides direct employment to thousands and indirectly through related industries. It is an irreplaceable source of stock feed Low level of skills development amongst the informal sector and small farmers. The availability of production capital by small and emerging farmers. Grain production is a once a year activity, meaning all the grain produced and harvested
by the end of the summer season needs to be stored in silos until utilised. This adds to the cost of the price of grain for the consumer, millers and the industry. The availability of silos and storage facilities in all the production areas. The silos, owned by Weaknesses Afgri in the Mpumalanga area are distributed in areas where the commercial farmers are located. The small and emerging farmers in the former homelands have limited access to storage facilities. A well-established animal production sector in Mpumalanga allows for the opportunity to
produce animal feed for this sector. Crop production is an available asset in mixed farming systems where animal husbandry is part of the farming enterprise. Agro-processing
Opportunities Organic, non GMO production Fluctuation in prices
Environmental conditions Cost of finance
Threats Theft and vandalism
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10 Commodity Analysis – Vegetables
The commodity analysis on vegetables will focus on carrots, cabbage and potatoes. These vegetables have a high competitive advantage within Nkangala District.
10.1 Local Markets In South Africa carrots, cabbages and potatoes are sold through different marketing channels such as the National Fresh Produce Markets (NFPMs), via wholesalers such as Freshmark, direct sales to retailers (in both the formal and informal sectors – e.g. supermarkets, greengrocers, hawkers, farm gate sales, to processors; and surplus produce are also exported
Sales of potatoes at the NFPMs have been declining over the years but NFPMs remain the most important channel for the sale of fresh potatoes in South Africa (36% of the potato crop in 2013). Johannesburg fresh produce market with 32% share is the biggest potato market followed by Tshwane with 18%, Cape Town with 10% and Durban with 10% share. In 2013 the Informal Markets (primarily comprised of street hawkers) made up the second largest distribution channel with 28% of the total crop sold via this channel. The remainder of the crop was used for processing (20% of the total crop), for export (8% of the crop) and for seed (8% of the crop).
It is estimated that in 2013 approximately 74% of all cabbages and 60% of carrots were sold via the NFPM’s while the other distribution channels and markets made up the remaining 36% and 40% respectively.
Local marketing channels for vegetables include: Direct sales (farmer-to-consumer) Street hawkers/visiting hawkers Free markets, wet markets and informal auctions Small independent shops and or supermarkets Large retail chains Restaurants and hospitality businesses Public and private institutions that provide meals to their residents, inmates, learners or patients, and food schemes National Fresh Produce Markets Packhouses, vegetable packers, wholesalers and exporters Vegetable processors
The local marketing channels which provides the greatest opportunity for cabbages, carrots
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and potatoes are listed in the Table below.
Table 10.1: Marketing Channel Opportunities Marketing Channel Opportunities Street hawkers and visiting High priority because it is such an important and profitable channel, hawkers (bakkie traders) however, a system should be implemented to coordinate transactions using modern technology (e.g. computerized scheduling of supply and logistics, and instant message communication) otherwise dealing with large numbers of small transactions will be unviable. Large retail chains Very high priority because this is becoming the main modern marketing channel for fresh produce, and farmers can collectively access this market through the Agri-Parks scheme. The Agri-Park system are in a good position to develop a system that enables traceability when targeting this channel. Large restaurant and fast High priority because this may be a large, consistent and fairly easy food chains, large hospitality channel to target and especially to distribute to. groups and large employers that provide meals to their employees (potatoes only) Public and private Very high priority, especially for government-run institutions and food institutions that provide programs. meals to their residents, inmates, learners or patients, and food schemes National Fresh Produce High priority during the initial phase simply because it is the easiest Markets marketing channel for potatoes, cabbages and carrots to start with, however, priority should soon decrease as contracts via more profitable marketing channels are secured
Packhouses, vegetable High priority in areas where packhouses that handle carrots, cabbages packers, wholesalers and and potatoes are situated, and low or no priority in areas where such exporters packhouses are absent. The Agri-Park system should develop a system to enable traceability when targeting this channel. Vegetable processors High priority because financial and non-financial support provision can be negotiated, and could be a low-risk marketing channel to start with during the initial phases of the Agri-Park scheme.
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10.1.1 Global Markets Potatoes In 2013 approximately 8% of the total crop was exported. Potatoes are probably the most suitable of the major vegetable types for the export market (easy to grade and pack and under correct conditions the shelf life is much longer than most other vegetables). Unfortunately, the bulkiness of potatoes and the need for refrigerated transport (especially where the distance is very long), make the export of potatoes expensive and for this reason South Africa’s primary export markets are located within the SADC region (with 95% of exports going to Mozambique, Angola, Zimbabwe and Zambia). For the reasons outlined above South Africa is not considered to be a major exporter worldwide with its exports contributing only 0.49% of total potato exports and it is ranked number 27 in the world potato exports. Whilst there is scope to increase our export market share (both into Africa and the Middle East) it should be noted that other African countries (such as Malawi, Egypt and Algeria) all produce twice as much potatoes as SA and will probably be more competitive than SA given the prohibitively high costs of transporting potatoes over long distances.
Zambia applies 0.00% preferential tariff, to potatoes originating from South Africa. However other African markets are highly protected with Mozambique and Angola applying 15%, Congo 30%, Zimbabwe 40% and Ghana 20% to potatoes exports originating from South Africa. SA has a preferential trading agreement (PTA) with the EU and they apply zero tariffs to potatoes originating from South Africa.
The potato industry is one the few fresh produce industries currently in South Africa which has a full quality assurance service at all the fresh produce markets in the country. The potato industry acknowledges the importance of this service and recognizes the added benefit that results from this, such as traceability of the product. The quality assurance is provided to the potato industry by PROKON (Product Control for Agriculture) an article 21 company. PROKON is charged with establishing and maintaining product quality for the benefit of all, from farmers to the potato consumer.
Cabbages South Africa is not a major cabbage exporter; more than 70% of cabbage produced is absorbed by the domestic fresh market. In 2013, it represented 0.26% of world exports and it was ranked number 29 in the world. South African cabbage exports were mainly destined to Lesotho, Botswana, Swaziland, Namibia, Angola and Mozambique. Cabbage exports from South Africa over the past 10 years reveal considerable fluctuations (linked primarily to changes in production volumes) and the highest volumes were exported in
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2008 (1 000 tons to the value of R 6 million). During 2013, South Africa’s cabbage export amounted to approximately 900 tons. South African cabbage exports were mainly destined to Lesotho, Botswana, Swaziland, Namibia, Angola and Mozambique.
A review of provincial shares towards national cabbage exports shows that the Western Cape, Gauteng and Mpumalanga provinces have commanded the greatest share of exports for the past ten years. The above leading export provinces derive their advantage from the fact that the registered exporters are based in their provinces and they also have exit points for cabbage exports.
During 2013, South Africa has diversified 89.2% of its cabbage exports to Lesotho, Botswana, Swaziland and Namibia. These countries apply 0% Intra SACU rate to cabbage export originating from South Africa. South Africa also exported to Mozambique, and Angola and these countries apply 15% and 50% tariff respectively, in spite of the existence of the SADC-FTA (Profile of Cabbages Market Value Chain, 2014).
Carrots South Africa is not a major carrot exporter. In 2013, it represented 0.59% of world exports and its ranking in the world was number 23. Most of carrots produced were destined for domestic markets and only a relative small surplus of 20 000 tons were available for export. South Africa’s carrot exports were mostly destined for countries in the SADC region (Angola, Namibia, Mozambique, Botswana, Swaziland and Lesotho) and the United Kingdom.
In 2013 Angola commanded a 26.7% share of South Africa’s carrots export, followed by Namibia (13%), and Mozambique (12%). Of interest is the fact that South Africa’s carrot exports to the United Kingdom have increased by 34% and 5% in value and quantity respectively between 2009 and 2013 period. In total approximately 14 000 tons was exported in 2013. Angola and Mozambique are still protected by high import tariffs of 15% in spite of the existence of the SADC-FTA.
A review of provincial shares towards national carrot exports shows that the Western Cape, Gauteng, Free State and KwaZulu-Natal to a lesser extent consistently registered exports during the past ten years. The Free State province contribution can be attributed to carrots exports to neighbouring Lesotho and similarly the North West province export to neighbouring Botswana. The high export values for Western Cape and Gauteng can be attributed to the export exist points and the registered exporters located in these provinces. (Profile of Carrots Market Value Chain, 2014).
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10.2 Value Chain Assessment Diagram 10.1: Vegetable Value Chain Input Resources Plant material
Crop Production
Harvesting & Curing
Cleaning and
Grading
Fresh Packaging/ branding
Cool Storage
Transport & Distribution
Export Market Co-operatives Other Private Fresh Produce Seed Markets Traders Processors
Hawkers Farm Retailers Fast food Other Informal Gate shops Markets Consumers
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NKANGALA AGRI - PARK
10.3 Agro-processing
The following Table represents the different types of agro-processing that be done with vegetables.
Table 10.2: Vegetables Agro-Processing Potatoes Carrots Cabbages Sorting Fresh packing and branding Trimming and grading Fresh packing and branding Pickling (usually with other Fresh packing (smaller Crisps vegetables) varieties or where relevant) Frozen fries Freezing and branding Fresh fries Sweet jam or conserve Freezing Mixed vegetables (canned Canning, pickling and/or and frozen) fermentation including Other: baby food, sauerkraut and other reconstituted potato products products, potato starch etc. Chutney production Preserve, jam or jelly production
The top priorities for agro-processing for each of the proposed vegetables are printed in bold in the Table above. Fresh fries are a high priority because it may be worth the investment as this product category is fairly well shielded from global competition, and once the market has been entered, it is characterised by low transaction cost.
10.4 Market Segmentation As discussed in Table 10.3 under the importance of and opportunities posed by the specific marketing channels, the following market segments seems to be the most promising: National Fresh Produce Markets and potato processors during the early phases, thereafter moving on to more profitable segments as listed below. Street hawkers and visiting hawkers (bakkie traders) - coordinate transactions using modern technology to facilitate streamlined distribution of potatoes to informal markets. Large retail chains. Large restaurant groups and fast food chains. Government-run institutions and food programs Packhouses and vegetable packers in areas where packhouses that handle potatoes are situated. Regarding value adding, the most important opportunity for potatoes is to produce fresh
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(uncooked, unbaked and not frozen) French fries in "catering-size" air-tight plastic bags, to brand it properly, position it as a steady, convenient and cost efficient source of ready-to-fry chips to local catering businesses, restaurants, fast food outlets and government institutions.
In terms of cabbage production, the most important opportunities include simple fresh packaging and branding (huge opportunity for improvement in the local and national market), but further processing will probably not be viable for cabbages in the current market situation
In terms of carrot production, the most important opportunities include simple fresh packaging and branding (huge opportunity for improvement in the local and national market) and possibly the production of a sweet jam (although extensive direct customer orientated market research is needed to assess viability).
10.5 Stakeholders Table 10.3 lists the stakeholders within the vegetables industry within the District. The closest market in Mpumalanga to the Agri-Park is the Witbank Fresh Produce Market situated in Emalahleni.
Table 10.3: Stakeholders - Vegetables Name Type Witbank Fresh Produce Market Fresh Produce Markets Eureka Fruit and Vegetable Market Fruit and Vegetable Packers Franks Market Garden Fruit and Vegetable Packers Fruit and Veg City (Emalahleni) Fruit and Vegetable Packers Fruit and Veg City (Middelburg) Fruit and Vegetable Packers Fruit and Veg King Fruit and Vegetable Packers
10.5.1 Industry Role Players The main industry role players in terms of processing of vegetables include: Dimpho Fresh Food Golden Harvest McCain Tiger Brands Rhodes Food Group
Industry Associations Include:
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PotatoeSA Fresh Produce Exporters’ Association South African Fruit and Vegetable Canners’ Association
10.6 Technology Technology plays a vital role in the development of the agricultural industry and today farmers use technology to assist in producing food for a growing world. High tech advances have been assist in making farming life easier and more profitable. Smaller farmers can hold their own by moulding the technology to fit their management techniques and needs.
The Table below indicates the various technologies that the Agri-Park can use within Nkangala District. By utilising the various technologies, the small scale and emerging farmers can improve on the production of the variety of livestock farmed and ultimately increase their profit.
The technologies were rated on a scale of 0 (not at all) to 3 (highly applicable), for the purpose of identifying the most suitable only those rated 2 and 3 are provided in the Table.
Table 10.4: Technologies – Vegetable Farming Technology & Description Function/Benefit to Farmer Skill Level Required Mechanisation New generation small hand tools Many farming activities, especially Low repetitive day-to-day work, can be greatly enhanced by hand tools designed for the particular task, speeding up production and reduce health and safety risk (e.g. back strain, wearing of joints and skin, etc.). Small-scale implements and tractors: Farmers benefit from modern Medium to New generation of farming implements mechanisation and large leaps in high and tractors tailored for small-scale productivity even though they farm at (especially for farming. small scale, and at a much lower cost maintenance compared to conventional implements and repair). used by large commercial farmers. Precision farming, integrated farm management systems and software Precision farming: Gaining real-time or Optimising and tailoring production levels High exact information within particular parts at precise and small-area level so that of a single field e.g. moisture and yield is maximised and inputs are nutrient levels, soil type and depth etc., minimised.
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Technology & Description Function/Benefit to Farmer Skill Level Required to determine the most appropriate rate of application of water, fertilizer and to adjust implement settings automatically and instantly. Precision farming can also be applied to animal production, aquaculture and agroforestry systems. Integrated farm management software: Maximise profitability and efficiency High Combines information and automate some management and management systems from various on- administrative tasks. Coordinate and and off-farms sources to coordinate simplify management processes. farming activities in a highly efficient manner. Includes a variety of technologies e.g. farm asset tracking systems, cloud computing, record keeping, accounting, mapping, water and soil management, weather forecasting etc. Plan-A-Head Nursery System Software: Integrate with other Plan-A-Head farming Medium Management of nurseries for flower, software to allow for whole-farm vegetable and tree (forestry or even enterprise management. Particular strong agroforestry) seedlings. features include germination monitoring and marketing (especially order taking and dispatch). Plan-A-Head Vegetable Management Integrate with other Plan-A-Head farming Medium Software Program with Vegetable software to allow for whole-farm Management System: Management enterprise management. A particular system for a vegetable production strong feature of the system is the fact enterprise. that it facilitates precision farming due to excellent monitoring, control and record keeping at field and even sub-field level, and its mapping capability. SimJunior: Basic financial management Easy to use. Ideal for the small-scale Low and accounting software for the small- farmer scale farmer. Accord: Complete human resource Particular strong features of the system Medium management system for farmers, include its simplicity and coverage of including payroll, HR record keeping basic employment legislation. and administration. Duet: Fruit and vegetable marketing Integrated with Technofresh (a market Medium
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Technology & Description Function/Benefit to Farmer Skill Level Required and distribution software dealing with price information provider). different products, grades and varieties, prices, market agents, packaging, distribution and even workers involved in these marketing activities. Groundwater access via wells or boreholes Manual well digging or borehole drilling: Gain access to groundwater resources Low to Although mechanical drilling can reach much more cheaply compared to medium depths of 150 meters, it is generally too conventional mechanical drilling. expensive for small-scale farmers. In case the groundwater table are less than 45-meter-deep and the subsoil material are soft, manual drilling or well digging are a cost efficient option. Water pumping/lifting Treadle pump: human-powered Enables small-scale irrigation and larger Low (stepping on pedals) suction water scale animal watering at a very low cost pump. Can be fixed (Lowe cost) or in areas with a shallow water table. portable. Rope pumps: human-powered (usually Enables small-scale irrigation and larger Low by hand crank) water pump. scale animal watering at a very low cost in areas with a deep water table. Hand piston pump: pump water from Relative low cost option to pump small Low depths up to 35 meter. quantities of water from a groundwater depth of up to 35 meter. Bulk and long-term water storage in-ground storage) Pond lining fabric: Ponds and earth Can store very large quantity of water at Medium dams may lose large quantities of water very low cost. through seepage, or may not be able to hold water at all if the soil is too permeable. Lining will prevent this water loss to occur. Ferro-cement -lined tank: In-ground Can store fairly large quantity of water at Medium storage tanks made of cement and iron fairly low cost. wire mesh. Conventional plastic tank: Can store fairly large quantity of water at Low moderate cost. Conventional cement in-ground tank: Can store fairly to very large quantity of Low water.
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Technology & Description Function/Benefit to Farmer Skill Level Required Header tanks for soon-to-be-used irrigation water Header bag: large open plastic bag Provide water for a drip irrigation system Medium suspended above the field on a frame at about half the cost compared to that can be produced from local conventional in-field tanks. Can store a materials. very small quantity of water but at a very low cost. Earth mound bag: Provide water for a drip irrigation system Medium to low at about half the cost compared to conventional in-field tanks. Can store a moderate quantity of water at very low cost. Can supply a fairly large field of 200m2. Robust and easy to maintain - it can be repaired using same materials, tools and techniques that is required for tyre repair. Jumbo Thai Jar: Can store a small quantity of water at a Low moderate cost. Can be build and maintained by farmers themselves using locally available material. Requires only a small space. Ideal closely spaced farms or urban agriculture. Irrigation systems (water delivery) Pre-punched drip tape: tubes comes Low water pressure requirement. Very Very low with holes already provided, therefore simple and low cost. easy to install. Button emitter irrigation: button emitters Low water pressure requirement. High are fitted to irrigation lines, which transport water directly to the root zone. Baffle pre-punched drip irrigation: Low water pressure requirement. Use 50 - Very low Plastic sleeves/baffles localize water 70 percent less water compared to flow from pre-punched holes in the drip conventional drip irrigation. line. Mini sprinkler irrigation: Low flow system Can irrigate flat and sloping land. Ideal for Very low that require less pressure and is more hilly or sloping terrain or soils prone to water efficient than impact sprinklers water erosion, or areas planted with and conventional sprinkler irrigation. closely spaced crops but water are too scarce for higher flow irrigation systems such as impact sprinklers.
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Technology & Description Function/Benefit to Farmer Skill Level Required Impact sprinkler irrigation: higher flow Can irrigate flat, sloping and hilly terrain. Very low system that requires more pressure and Ideal for closely spaced crops on larger water compared to mini sprinkler fields where water scarcity prohibits flood systems. irrigation. Veldt management Land rehabilitation techniques: May Stabilise soil, control or reverse erosion Low to differ in technological complexity from damage and restore degraded land so medium as simple as brush packing to as that it can again be utilised for complex as biodegradable or long agricultural purposes. lasting soil cloths and mesh materials. Soil improvement and prevention of soil erosion Mulching technology: A variety of new Mulching material minimise or eliminate Low and efficient mulching materials are weed growth and water losses through developed. Mulching material are any evaporation, and also control various material that cover the soil surface. pests and diseases as well. Biodegradable mulches are also available. Biochar: Activated carbon ground into Significantly increase yield by assisting Low to a course powder, then worked into the with water and nutrient retention and medium soil. improving soil structure. Can be produced on-farm or at farmer community level using fairly simple techniques. Almost any plant or organic biomass can be turned into biochar. Lasts for thousands of years. In-field rainwater harvesting: Small Enable the soil to absorb much more Low basins (that can be made with a shovel) water that would have run off the field. capture rainwater, preventing it from Depending on the type of soil, the immediately running off the field during additional moisture may benefit the crop a rain event. Apart from cultivated for several months and may increase yield fields, micro-basins can also be significantly. established on pastures to increase carrying capacity of animals. Farm Energy Wind energy: Wind energy has been Wind is a renewable form of energy and High used for a long time in South Africa in the some areas in South Africa do have form of wind pumps. New generation sufficient wind development potential, wind technology allows for uses beyond especially when micro-climatic and small- wind pumping, including electricity area topographic factors are considered
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Technology & Description Function/Benefit to Farmer Skill Level Required generation at micro or farm level scale. which is appropriate for very small-scale operations. Less vulnerable to theft compared to solar panels. Solar technology incl. photovoltaic and Solar is a renewable form of energy and Low thermal panels and solar drying and most areas in South Africa do have cooking: There are two main forms of sufficient wind development potential. In solar energy harvesting, i.e. fact, some parts of the southern and photovoltaic panels that produces western Free State, western Limpopo, electricity, and thermal solar panels or Gauteng and especially the Northern tubes that heat water. Solar energy is Cape and North West have excellent also widely used on farms for solar drying solar power potential even at global and solar cooling. standards. Farm protection, security and visual monitoring Video and photographical technology: Valuable to monitor veldt condition, Medium Fixed point photography, security effects of grazing or fire control regime, camera systems and remote sensor- rehabilitation efforts, and to monitor triggered photography. animal or criminal activity in remote parts of the farm. Some systems notify the farmer by SMS of sensed activity and immediately send the footage by MMS or video clips to the farmer's mobile device (in additional to conventional recording and storage of images or video). Apps for mobile phones and tablets AgriApp: Farmer information tool for Useful general overview from a Low crop production. production perspective. Horticulture: General description of Useful general overview from a Low horticultural crop production, including production perspective. apples and vegetables. Online and mobile information portals AgriSuite Online: Internet based The system can be accessed on a PC or Low agricultural information system Mac, on tablets and smartphones, in the developed and maintained for farmers. office or on the farm. Contains the most Provide a variety of general agricultural essential, useful and concise information information directly to farmers. in a very simple and user-friendly format. FAO Ecocrop: Provide detailed crop Enable the farmer to select suitable crops Medium requirement information for almost any to farm with, and to diversify the farm's crop that are cultivated throughout the enterprises. world, including its uses and
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Technology & Description Function/Benefit to Farmer Skill Level Required requirements for temperature, rainfall/water, soil type, soil depth, soil pH, salinity, altitude etc. It also includes hundreds of forage crop species for extensive animal farmers. Other Recombinant DNA technology and Large gains in traits such as drought, salt, Low (from the genetic modified varieties: The process pest, pathogen or herbicide tolerance, farmer's of natural selection by traditional superior yields, nitrogen uptake ability, perspective) breeders can be accelerated by taste and texture etc. Particularly deliberate insertion of genes that code important to sustain future expanding for a particular trait into the host populations and to compensate for organism, thereby it is possible to climate change effects are drought and develop crop varieties that have more salt tolerance, nitrogen metabolism and desirable traits. even fixation, herbicide tolerance (to facilitate weeding, a major agricultural problem) and general yield improvements. Drones: Un-manned aircraft capable of Very useful for general inspections, High exploring the farm and taking photos monitoring and mapping. Advanced from the air. models can even perform some remote sensing functions. In-field soil and crop sensors: Measure a Know exactly when to irrigate or provide Medium to variety of soil factors, most importantly additional fertilizer, and how much high moisture, pH, organic matter, salinity water/fertilizer to apply. It may also and temperature levels. Crop sensors indicate the best time to harvest. can sensor water stress, nitrogen and other nutrient levels. No-till or conservation tillage: Land Significant cost savings in terms of diesel Low to preparation for crop production without (very energy intensive to lift the soil of an medium tilling the land at all, or just partially entire field, especially in case of deep breaking up of the soil. tillage). Increased moisture retention. Reduced soil erosion. Remote sensing: Interpreting satellite Enable the farmer to make well informed High images to make farming decisions. decisions based on information that Satellite images provide valuable otherwise would have been too difficult or information on biomass production, soil expensive to obtain. Provides complete and air mass temperature, soil moisture, information of the entire farm. Some plant stress levels, fire warnings etc. information is provided daily or instantly.
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Technology & Description Function/Benefit to Farmer Skill Level Required Integrated weed and pest management Usually much more effective and Medium to incl. biological control agents: Pests and sustainable than chemical control on its high weeds are major threats to farmers and own. food security. Chemical control has been effective for some pests and diseases but it is expensive and causes harm to human health and the environment. Consumers and governments locally and to export markets place increasing pressure on farmers to adopt integrated management practices to reduce reliance on only chemical control. Especially important is biological control where the natural enemy of the weed or pest are released locally to control population levels. It is not only applicable to crop farmers but to all extensive and semi-intensive animal farmers as well (pasture or veldt management).
10.7 Demand and Needs Analysis The most important marketing channels and channel related opportunities include National Fresh Produce Markets during the initial start-up phase, street hawkers including bakkie traders, however, it is essential to establish a logistical and supply coordination system, government institutions, as soon as the farmers become reliable suppliers, large retail chains should become major priority after the farmers have gained experience in production and the Agri-Parks system successfully established quality control and streamlined logistical arrangements, and packhouses (vegetable packers and wholesalers) and processors in case of farms that are situated near packers or processors that handle cabbages.
It is possible to provide an estimate for demand based on historical consumption figures and populations. The Table below provides a summary on estimated demand on a national and provincial level.
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Table 10.5: Estimated Demand for Vegetables Area of Demand Commodity Demand (tons) South Africa Vegetables (excl. potatoes) 2 363 130 Potatoes 1 923 478 Mpumalanga Vegetables (excl. potatoes) 184 717 Potatoes 150 351 Nkangala DM Vegetables (excl. potatoes) 47 024 Potatoes 38 276 Ehlanzeni DM Vegetables (excl. potatoes) 59 098 Potatoes 48 103 Gert Sibande DM Vegetables (excl. potatoes) 78 594 Potatoes 63 972
At an average per capita consumption of vegetables at 43kg and potatoes at 35kg, there is a clear demand for vegetables in South Africa. In South Africa there is a demand for 2 363 130 tons of vegetables (excluding potatoes) and a demand for 1 923 478 tons of potatoes every year.
10.8 Socio-Economic (Job Creation) Agriculture and its value chain is one of the key sectors for job creation and a strategic rural development tool for the revival of the economies of small towns. The National Development Plan targets several sectors to create additional jobs by 2030, agriculture being one of these sectors. Estimates of new jobs in the primary production sector are based largely on more land being brought under agricultural cultivation, in particular through irrigation schemes. Commercializing communal land, reviving failed land reform projects and handling current ones better would make millions of hectares of land productive again.
Vegetables are a highly labour intensive and a very large proportion of minimally skilled labour is absorbed in the industry. The vegetable industry has an employment multiplier effect in the following sectors: Transport; Processing; Independent trading; Retail; Packaging; Informal trading
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10.9 Contribution to Food Security Potatoes are the world’s most important root and tuber crop. In terms of global production, potato is the fourth most important food crop after corn, rice and wheat. It is grown in more than 125 countries and consumed almost daily by more than a billion people. Hundreds of millions of people in developing countries depend on potatoes for their survival. Potato plays a strong role in developing countries with its ability to provide nutritious food for the poor and hungry. Its ease of cultivation and nutritive content have made it a valuable food security and cash crop for millions of farmers. Potato’s very crucial role in ensuring food security and hunger alleviation owes to the fact: It can be produced all year round It is affordable, nutritious and healthy.
Potatoes are a non-fattening, nutritious and wholesome food that supplies many important nutrients to the diet. Potatoes contain approximately 78% water, 22% dry matter (specific gravity) and less than 1% fat. About 82% of dry matter is carbohydrate, mainly starch, with some dietary fibre and small quantities of various basic sugars. A single medium-sized potato contains about half the daily adult requirement of vitamin C. Potato is very low in fat, with just 5 percent of the fat content of wheat, and one-fourth the calories of bread. Boiled, it has more protein than maize, and nearly twice the calcium.
Cabbages are 90% water and a very good source of Vitamin A, C and B as well as minerals which makes cabbage an essential vegetable to combat malnutrition.
10.10 Regulatory Requirements Local markets are governed by a series of policies that are put in place for various reasons. The most important of these Acts is the Agricultural Product Standards Act, 1990 which sets out to establish a set of norms and standards related to the sale, labelling, storage and packaging of vegetables throughout SA. This indicates that all vegetables sold in South Africa have to comply with the regulations set out in the norms. The vegetable containers have to be labelled correctly with the name of the cultivar, pack house code, grade, weight and number of units must be displayed on the packaging. The act also details the juice content in drinks and how they should be labelled. Finally, the act also outlines offences and penalties.
The various other acts and policies which also apply to the vegetable industry are included in the Table below.
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Table 10.6: Polices Affecting the Vegetable Industry Act Description Agricultural This act aims to standardise quality norms for agricultural and related products by Product Standards establishing the criteria for such norms and distributing the information to all Act, 1990 (Act No. interested parties. These criteria may include the quality, packaging, marking and 119 Of 1990) labelling as well as the chemical composition and microbiological contaminants of the products. This relates to all goods made from vegetables e.g. labelling of carrots juice (100% carrot juice; 60% carrot juice with 40% tomato juice) (Department of Agriculture, Forestry and Fisheries, 1998). Implication: The Agri-Park must ensure that all vegetable products produced comply with the various criteria in order for products to be 100% compliant. Draft Plant Health Provides phytosanitary measures to prevent the introduction, establishment and (Phytosanitary) Bill spread of regulated pests in South Africa and the control of regulated pests. It also 2014 provides regulation of the movement of plants, plant products and other regulated articles into, within and out of South Africa include exports of agricultural goods (Deaprtment of Agriculture, Forestry and Fisheries). Implication: The Agri-Park must comply with all regulation and measures in order to ensure that all phytosanitary requirements are met. Agricultural Pests The purpose of the Agricultural Pests Act, 1983 (Act No. 36 of 1983) and its Act, 1983 (Act No. subordinate legislations is to provide for measures by which agricultural pests may 36 Of 1983) be prevented and combated and for matters connected therewith. The Act also mandates the Directorate Plant Health to regulate plants, plant products and other regulated articles when imported into South Africa. Plants, plant products and related materials are capable of harbouring quarantine pests, which if they enter South Africa with imported commodities and establish, may endanger the South African agricultural sectors. Similarly, pests that occur in South Africa may endanger countries to which we export and as a result South Africa may lose its export markets (Department of Agriculture, Forestry and Fisheries, 1983).
Implication: The Agri-Park must ensure that all plants, products and related material harbour no pests by complying with measures by which pests may be prevented and combated. The Agri-Park’s management should develop programmes/schedules to ensure the control of pests. Fertilisers, Farm The act provides for the appointment of a Registrar of Fertilizers, Farm Feeds, Feeds, Agricultural Agricultural Remedies and Stock Remedies; for the registration of fertilizers, farm Remedies and feeds, agricultural remedies, stock remedies, sterilizing plants and pest control Stock Remedies operators; to regulate or prohibit the importation, sale, acquisition, disposal or use Act, 1947 (Act No. of fertilizers, farm feeds, agricultural remedies and stock remedies; to provide for 36 Of 1947) the designation of technical advisers and analysts; and to provide for matters incidental thereto (Department of Agriculture, Forestry and Fisheries, 1947). Implication: The Agri-Park must ensure that all regulations regarding the
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Act Description manufacturing, distribution, importation, sale, use and advertisement of any fertilizers, animal feeds, pesticides, stock remedies as well as the operation of any sterilizing plants and pest control operators are adhered to. This can be done through the farmer support units which will need to have a programme in place for the above mentioned to be monitored. National Water This act encompasses laws relating to water resources and the use thereof Act, 1998 (Act (National Water Act, 1998 (Act No.36 of 1998), 1998). No.36 Of 1998) Implication: The Agri-Park must ensure that water used is used in a sustainable way to ensure the sustainability of the nation’s water resources. The Food Safety The FSSC 22000 Food Safety System Certification provides a framework for Management effectively managing your organization's food safety responsibilities. FSSC 22000 is System FSSC fully recognized by the Global Food Safety Initiative (GFSI) and is based on existing 22000 Certification ISO Standards. It demonstrates your company has a robust Food Safety Management System in place that meets the requirements of your customers and consumers (FSSC 22000, 2015). Implication: By complying with the Food Safety Management System FSSC 22000 Certification the Agri-Park is ensuring that it products meet required standards thus meeting requirements of both the customer and consumer.
Hazard Analysis HACCP is a management system in which food safety is addressed through the and Critical analysis and control of biological, chemical, and physical hazards from raw Control Points material production, procurement and handling, to manufacturing, distribution and consumption of the finished product (U.S Food and Drug Administration, (HACCP) 2015). Implication: By ensuring that food safety requirements are met the Agri-Park is taking into account the needs of both the customer and consumer as well as enabling a safe and hazard free work environment. Basic Conditions The act encompasses those regulations associated with fair labour practices of Employment (Depart of Labour, 1983). Act, 1983 (Act No. Implication: The Agri-Park must ensure that fair labour practices are followed to 3 Of 1983) ensure that the basic conditions of employment are met, such as leave, working time, termination of employment etc. Municipal By-Laws Municipal by-laws will need to be investigated with regard to the establishment and Regulations, of the vegetable processing facilities in a municipal area. (where relevant) Implication: The Agri-Park will not be able to operate vegetable processing facilities unless any by-laws are met. Marketing of The Act has authorised an establishment and enforcement of regulatory Agricultural measures to intervene in the marketing of agricultural products, including the Products Act, 1968 introduction of levies on agricultural products (Department of Agriculture, Forestry (Act No. 59 Of and Fisheries, 1968). 1968) Implication: The Agri-Park should establish a programmes that will manage the marketing of its own products in order to meet the requirements of the Act.
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Act Description Agricultural The act controls and promotes specific product standards from mainly a quality Products point of view for local as well as export purposes. A list of products for which Standards Act, standards have been set through regulations is promulgated under the act by the 1990 (Act No. 119 minister of agriculture (Department of Agriculture, Forestry and Fisheries, 1990) . Of 1990) Implication: Food and its associated products will go through various agro- processing activities before being a marketable product. To maintain quality assurance, it is recommended that the Agri-Park establishes a team that will be responsible for carrying out activities that will meet the requirements of the Act Consumer To promote a fair, accessible and sustainable marketplace for consumer products Protection Act and services and for that purpose establish national standards relating to consumer protection (National Consumer Tribunal, 2009). Implication: The act indicates that the Agri-Park has a responsibility to provide products which promote a fair, accessible and sustainable marketplace for the consumer Conservation of This Act provides for control over the utilisation of natural agricultural resources in Agricultural order to promote the conservation of soil, water sources and vegetation, and the Resources Act, combat of weeds and invader plants (Department of agriculture, Forestry and 1983 (Act No. 43 Fisheries, 1963). Of 1983) Implication: The Agri-Park will be required to implement policies that will maintain and monitor best agricultural practices to ensure the conservation of soil and vegetation, and also combat invader plant species. Plant Breeders' The Act regulates the granting of certain rights relating to new varieties of certain Right Act, 1976 kinds of plants, the protection of such rights and the issue of licences in respect of (Act No. 15 Of the exercising of the rights (Departmet of Agriculture, Forestry and Fisheries, 1976). 1976) Implication: By acquiring the required licence, it would allow Agri-Park farmers to use (re-sow) any protected plant on his or her holding should the Agri-Park require a protected/ new species of vegetable. Perishable This Act provides for the control of perishable products intended for export from Products Export the Republic of South Africa and for the continued existence of a statutory board Control Act, 1983 to bring about the orderly and efficient export of perishable products from the (Act No. 9 Of 1983) Republic (Department of Agriculture, Forestry and Fisheries, 1983). Implication: In the event of export, it is imperative that the Agri-Park establishes and maintains control over the export products. It is the onus of the Agri-Park to establish a team that is responsible for food health and safety regulations.
Agricultural This Act provides for the establishment of an Agricultural Produce Agents Council Produce Agents (AAC) and Fidelity funds in respect of agricultural produce agents, and for the Act, 1992 (Act No. control of certain activities of agricultural produce agents (Department of 12 Of 1992) Agriculture, Forestry and Fisheries, 1992).
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Act Description This Act has not been brought into operation in its entirety but will eventually replace the Commission for Fresh Produce Markets Act, 1970 (Act No. 82 of 1970), and the Agricultural Produce Agency Sales Act, 1975 (Act No. 12 of 1975). Implication: The Agri-Park should play and intermediary role in moving produce from farm to market. As such, it is important that marketing activities are managed and monitored according to the standards set out by the Act. Agricultural Credit The Act provides for a system of assistance to persons carrying on or undertaking Act, 1966 (Act No. to carry on farming operations, and control in respect of assistance rendered 28 Of 1966) (Unknown, 1966). Implication: The Agri-Park management should provide a service to its producers in the way of easing access to credit. The Agri-Park should, on behalf of the producers, assist in accessing credit for agricultural production purposes. Additionally, access to credit will allow producers access to the relevant inputs for agricultural production purposes and, as such, produce necessary products for the Agri-Hub (marketing point) Agricultural This Act provides for the establishment of and control over an agricultural Development development fund for the handling of money received for development Fund Act, 1993 (Unknown, 1993). (Act No. 175 Of Implication: Funding is a fundamental cornerstone to the development of the 1993) Agri-Park and its stakeholder. The Agri-Park management should play an intermediary role in accessing and use of such funding.
10.11 Substitute Products Substitute goods/products are goods which, as a result of changed conditions, may replace each other in use, or consumption. A substitute good, in contrast to a complementary good, is a good with a positive cross-price elasticity of demand, meaning that as the demand for a good increases, the price of another good is increased. The Table below lists and describes potential substitutes for vegetables and vegetable products.
Table 10.7: Substitutes for Vegetables Substitute Products Description Other vegetables Consumers would be more likely to substitute for price and preference when substituting various vegetables. For example, a consumer may prefer sweet potatoes as an alternative to potatoes. Grains/legumes Grains and cereals may be considered as a cheaper alternative to vegetables, and cereals although they are often considered complements. A low income household would, however, closely consider price when deciding to purchase these products.
The consumption of vegetables, in general, is of a habitual nature with most consumers eating
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vegetables as a complement to their meat, or fish dishes. Given that some vegetables are a staple food item and consumed by habit, there is no real substitute for vegetables other than alternative types of vegetables due to the broad availability. A consumer, for example, may substitute potatoes with sweet potatoes within the vegetable category.
The impact that substitutes for vegetables might have on the Nkangala Agri-Park is likely to be minor, given the relative non-availability of substitutes for vegetables. The Agri-Park model should maintain a diverse vegetable product offering in order to compete with other vegetables available on the market. In addition, producing and processing of staple food vegetables will be a key undertaking in competing against potential substitutes.
10.12 Societal and Cultural Trends Societal and cultural trends are trends that relate to the social and cultural values and practices within a society, or culture. These are long term trends (at least two to five years) that explain why people behave the way they do. The South African food industry’s direction is affected by the growing influence of demographics, especially with respect to societal and cultural trends.
It is important that the Agri-Park positions itself to take advantage of such trends by meeting the demands of society through the processing of relevant products. The following, vegetable specific, cultural and societal trends have been identified and described.
The trend in rising incomes within South Africa has provided the local consumer with increased purchasing power and, therefore, the ability to increase demand for food. Increased purchasing power has also allowed the consumer increased access to a variety of food, including processed, packaged and frozen vegetables (or convenience foods as described below).
Convenience foods or also known as time-saving foods as they are partially, or completely prepared, are increasing in demand as consumers spending power increases and more value is given to time-saving. Vegetable specific convenience foods include microwave meals and chopped, frozen vegetables.
The increasing demand of quick-food has increased the number of quick-food items available to consumers in the last two decades. The most likely consumers to buy these items include modern families (families that lead an individualistic lifestyle and do not sit down to as many traditional meals), middle- to high-income families, and younger families. Within South Africa
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vegetables are seen as the healthy choice and form part of people’s daily diet. They are an important part of healthy eating and are an important source of nutrients, such as fibre, folate, potassium, etc. Vegetables are a good choice of nutrition as they help to reduce the risk of having strokes, cancer, heart disease and type 2 diabetes.
Vegetarianism, which is the practice of abstaining from the consumption of meat has been adopted for many reasons, and as such have a preference for vegetables. A healthy vegetarian diet should be balanced and contain vegetables, fruit, eggs, beans, some dairy products, etc. Becoming a vegetarian has been associated moral and ethical concerns, religious reasons as well as health issues.
There has been a growing trend in terms of purchasing organically grown food. Organically grown vegetables provides consumers with produce free of: Chemicals, have more nutrients (vitamins, minerals, enzymes, and micronutrients); Better taste; No GMO (Genetically Modified Organism); No hormones, antibiotics and drugs; Preserves ecosystem; Reduce pollution and protects water and soil; Preserves agricultural diversity; and Keeps children and future safe.
Non GMO vegetables are growing in popularity. A variety of health risk have been attributed to GMO, such as organ damage, fertility, tumors, etc. (however these effects were noted under laboratory conditions). There are public concerns regarding GMO in terms of food safety, regulation, labelling as well as environmental impact. Genetically modified crops grown in SA are pre-dominantly white maize, yellow maize, cotton and soya.
10.13 SWOT Analysis Table 10.8: SWOT Analysis – Vegetables VEGETABLES Economic growth advantages Highly nutritive products
Contributor to food security Proximity to major market
Strength Availability of natural resources Optimal soil usage Wide variety of vegetables can be grown
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VEGETABLES Shortage of skilled workers (processing) Poor farming practices Poor standard of products
Limited irrigation resources/capacity Lack of Good Agricultural Practice principles Short marketing window (perishable product)
Weakness Small-scale production not competitive Local emerging farmers are struggling produce quantity (economies of scale) Storage Intensive production Organic produce Local labelling Employment potential
Shift in consumer preference (healthy living) Growing preference for convenience Increasing demand for fresh produce globally (export market) Cooperative farming (alliances – economy of scale)
Opportunities Technological advancement Agro-processing opportunities Hydroponic production Non-GMO produce Increasing input costs
Market limitations Competition
Threats Extreme weather conditions (drought, hail, frost)
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11 Agri-Park Concept Development
In the Agri-Park Concept Development Section, the concept of how the Agri-Park will be organised and function is developed. The information gathered and analysed in earlier sections of the Business Plan will be applied in the concept development. Each of the commodities that were selected for production in the initial phase of the Agri-Parks programme have a specific concept developed, which addresses specific activities that take place in the production of each commodity. Ultimately, an overall concept is developed, as well, which refers to the organisation and functioning of the Agri-Park in general.
11.1 Introduction of the Agri-Park Concept The Agri-park development concept will discuss a number a development factors for each of the components which forms part of the Agri-park model, namely: 1. Smallholder and emerging farmers (SMH) 2. Farmer Production Support Unit (FPSU) 3. Agri-hub (AH) 4. Rural Urban Market Centre (RUMC) – in Mbombela, Ehlanzeni District
The Agri-Parks concept developed below also considers the requirements of the location and coverage of the FPSU, AH, and the RUMC. The concept is developed by the defining the following aspects: Roles and functions Location Key products/services Infrastructure and equipment Logistics Human Resources (HR) Training
11.2 Proposed Development Concepts – Beef The development concept for the production of beef has been developed according to the Agri-Parks Model, as stated in the introduction. The process begins with the production of livestock by the farmer who produces weaned calves and is supported by the FPSU by providing services such as supplying feed, veterinary assistance, and auctions and sales. Livestock that is not is not intended for processing is sold at the FPSU to the local market, while livestock for further processing is transported to the AH.
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NKANGALA AGRI - PARK
At the AH, the abattoir will be responsible for slaughtering and performing other production function through other facilities in the AH. From the AH, the red meat products can be sold, transported to various retail and distribution markets or the RUMC. The Mpumalanga International Fresh Produce Market in Mbombela will be one of the main markets for red meat. The RUMC can further transport products to local and international market, while providing information on demand and market trends to the other components. Table 11.1 explores the development for red meat production.
Table 11.1: Proposed Development Concept – Beef Production Flow SHF FPSU AH RUMC
Key Role & The core role of the smallhoder Input supplies such as feed and Training, logistics, abattoir and cold Market intelligence, assist Function and large scale farmers would medicines as well as training and storage farmers, and processors in be the livestock production for extension support, mechanisation managing a nexus of the beef market support and local logistics support contracts, large warehousing and cold storage facilities Location All livestock farmers in Livestock production occurs As proposed, the AH will be situated The proposed location of the Nkangala District throughouth the District so all FPSUs in Dr JS Moroka LM RUMC is in Mbombela, which must be equiped to handle is also the capital of the livestock. Province and the location for the Mpumalanga International Fresh Produce Market. This will be the only RUMC in the Province, in order to avoid duplication of resources. Human The core HR personnel that the The FPSU will provide the following The AH will provide the following HR; The RUMC will provide the Resources SHF would require are: HR/HR facilities; following HR; Farm manager (1) Agricultural extension officier Administrative manager (2) IT expert/personnel (1)
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Production Flow SHF FPSU AH RUMC
Addition staff would include (2) / support office; Quality control personnel (2) Administrative manager the following: Machine operators (2) / Local Staffs to manage the Agro- (1) Farm labourers (feeding, mechanisation centre and Processing facilities Training personnel vaccinating) workshops; Research and Demonstration Marketing agents( to Herders Agronomist ( for soil testing personnel Facilate market linkages, e.t.c.) (2) Training personnel (1) facilitate contracts with Livestock specialist wholesalers and major Researchers (2) retail outlets and also to Voluntary/Established garther informatio on commercial farmers to mentor prices at fresh produce the small scale farmers (as market that would be many as possible). communicated to the AH and FPSU). Training Continuous training for farmers One of the key function of the FPSU Some training would also be required Training of training personnels on recent technology. would be to provide training and at the hub e.g. on how to disseminate
extension support on various farm Training of processing staffs on information to the SHF, AH Other training opportunities that can take place for practices, to the SHF. how to handle and operate and the FPSU. smallholder farms are for the various processing equipment. following skills: Training on best practices, Breeding Techniques based on changing demand Business skills and supply. Finance skills Training on new innovations as they surface. Training on abattoir health regulations and animal welfare
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Production Flow SHF FPSU AH RUMC
Key product/ The core activity is the farming The core activities of the FPSU are: The core activities of the AH is to: The core activities of the activities of beef cattle. This includes Assisting farmers to transport Slaughter cattle RUMC are: esuring that there is sufficient livestock to AH (abattoir) Grading meat Collection of final grazing and keeping cattle in Assist with disease and Package meat products from the AH good condition. Other parasite control Cold storage Maketing and distribution activities include weaning and Assist with feed- and herd of final products to dehorning calves management different wholesalers and Other veternary services major retail outlets Exporting of final products Infrastructure/ The smallholder farmers would The FPSU would require to put in The AH would require to put in place The RUMC would require to Equipment require the following place the following equipments/ the following put in place the following equipment: infrastructure: equipments/infrastructure: equipments/ infrastructure: Neck clamp Transport Administrative facilities Large warehouses/ Feeders Auction facility Rental facilities holding facilities Water troughs Pens and other cattle Abattoir facilities Packaging Cold storage facilities Pens/ feedlot handling equipment facilities Administrative facilities/ Crush pen and squeeze Quality control facilities information centre chute Agricultural input distribution Trailers for transporting and sales centre cattle Retail facility Dehorn equipment Training centre Student and staff housing Logistics and transport facility
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Production Flow SHF FPSU AH RUMC
Logistics Smallholder farmers should be The FPSU should organise primary The same transport ( especially the organised into groups. Each logistics collection in terms of pens cold storage transport) will be used group should have a group where trucks ( bakkie/pick up to collect fresh potatoes from the head that would vehicles) with trailers would pick up FPSU to the AH for processing. communicate information livestock from various farms and Indictating that the transport from the farmers to the FPSU convey it to these cattle holding facilities would serve multiple and also arrange for delivery areas. purposes. of inputs with the FPSU. It is suggested that there should be input collection centres which would serve as small offices for the group heads. Technology/ICT In order to boost their Tracking devices on all vehicles to In order to remain conversant with The RMUC will provide production efficiency, the SHF prevent hijack and also to monitor the current prices fetched on the Information Data base that would require: the movements and locations of global, national and local market, so all the various basic units of Mordern tools, the drivers. as to be able to strategically supply the Agri-Park can subscribe mobile devices for Also, the FPSU would require beef products to the markets, the to. subscription to Apps. , to subscription to certain Apps from RUMC would also require enble them receive the RMUC to remain conversant subscription to certain Apps from the information from the with the current prices fetched on RMUC. This will enable the AH to RUMC on weather the global, national and local remain informed. forecast, disease control market, so as to be able to etc. strategically supply potatoes/ potato products to the markets.
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Production Flow SHF FPSU AH RUMC
*It should be noted the same transport facilitities would be used to service all the basic units of the Agri-Park, therefore, all the Transportation facilities would have these tracking devices.
Catalytic Project A catalytic project relating to the local beef market, that should ideally be linked to the FPSU in Dr JS Moroka LM (either Marapjane or Magareng) is the development of an abattoir. The main purpose would be to allow smallholder farmers with easy access to a market for the cattle. The abattoir can also include some primary beneficiation facilities in terms of packaging of fresh or frozen cuts for the local retail market.
11.3 Proposed Development Concept – Maize The development concept for maize will focus on the primary production of maize in Nkangala District. Maize will be transported to the FPSU for further processing, collection and distribution to the Hub. Some of the produce will be sold as fresh produce which will not need further processing, these products can go directly to the market, Mpumalanga IFPM or RUMC. Further processing can take place at the FPSU and/or the AH. Packaging and storage of products will take place at the AH, this includes cold storage.
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Table 11.2: Proposed Development Concept – Maize Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Key Role & The core role of the smallhoder farmers Input supplies (such as maize seed, Some training, logistics, Market intelligence, assist Function would be the primary production fertlizer, pesticides, herbicides, e.t.c.), Agro-Processing, farmers, and processors in maize training and extension support, storage/warehousing managing a nexus of mechanisation support, local logistics facilities, packaging contracts and large support, some storage, and facilities; logistics. warehousing. processing for local markets, through- put of excess products to Agri-hubs.
Location All smallholder farmers involved in Although, maize farmers will be As proposed by the The proposed location of maize production in the Nkangal supported by all the FPSU(s) that would province, the Agri-Hub is to the RUMC is in Mbombela District, especially, those in Steve be situated in the District, it is proposed be located in Dr JS Moroka (Ehlanzeni District) , which is Tshwete LM, Victor Khanye LM and that the major FPSU for maize be LM. also the capital of the Emalahleni LM where production is sitauted around Middelburg, in Steve Province and the location more concentrated. Tswhete LM, since majority of the for the Mpumalanga maize farmers are concentrated in this International Fresh Produce area. Market. This will be the only RUMC in the Province, in order to avoid duplication of resources. Human The core HR personnel that the SHF The FPSU will provide the following The AH will provide the The RUMC will provide the Resources would require from the FPSU are: HR/HR facilities; following HR; following HR; Extension officers Agricultural extension officier (2) Administrative IT expert/personnel (1) Agronomist / support office; manager (2) Administrative
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Reseachers Machine operators (2) / Local Quality control manager (1) Seasonal staffs (harvest labour) mechanisation centre and personnel (2) Training personnel Some permanent staff to manage workshops; Staffs to manage the Marketing agents (to day to day farm operations. Agronomist ( for soil testing e.t.c.) Agro-Processing Facilate market (2) facilities linkages, facilitate Researchers (2) Research and contracts with Voluntary/Established Demonstration wholesalers and major commercial farmers to mentor the personnel retail outlets and also to small scale farmers (as many as Training personnel (1) garther informatio on possible). prices at fresh produce market that would be communicated to the AH and FPSU). Training Small holder farmers would require One of the key function of the FPSU Some training would also Training of training training on: best farm practices, use of would be to provide training and be required at the hub e.g. personnels on how to tools and equipments, training on how extension support on various farm Training of processing disseminate information to to interpret market information and practices, to the SHF. staffs on how to handle the SHF, AH and the FPSU. ICT. The extension officiers that are and operate various conversant with maize production are processing equipment. well posiitioned to render this type of Training on best training. Also, training can be provided practices, based on by the well-established commercial changing demand potato farmers through a mentorship and supply. programme. Extension officiers Training on new through the DAFF can also organise innovations as they
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Agri-shows, where farmers can express surface. their concerns, and where training can be provided. Key product/ The core activities of the small holder The core activities of the FPSU are: The core activities of the The core activities of the activities farmers are: Collection of maize from SHF AH are: RUMC are: Land preparation Transportion of maize to the Receiving of maize Collection of final Maize farming (planting, silos within the FPSU premises from FPSU products from the AH fertlization, disease control, Some quality control Further Quality Maketing and irrigation e.t.c.) Weighing, sampling and control; distribution of final Harvesting testing of maize Processing of maize products to different Loading onto truks Drying, cleaning grading and into products such as: wholesalers and major sorting maize mielie meal retail outlets Transportation maize Storage of products ; Exporting of final destined for processing Some marketing; products directly from the farm to the Transportion of Bulk storage of final AH products to the RUMC. products Infrastructure/ The smallholder farmer would require The FPSU would require to put in place The AH would require to The RUMC would require to Equipment the following equipments, which can the following put in place the following put in place the following be hired from the FPSU: equipments/infrastructure: equipments/infrastructur: equipments/infrastructure: Tractor Transport ( e.g Bakkie or pick- Administrative Large warehouses/ Tillage implements up vehicles) facilities holding facilities Harvesters Silo equipment (bins, Rental facilities Administrative facilities/ Planters convayer belts, drying Agro-Processing information centre Trailers and bins. equipment, etc.) facilities (peeler, Solid set irrigation equipment Small scale processing slicer, fryer e.t.c.)
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Planter/fertiliser applicator facilities for local market Packaging facilities Fertiliser equipment (spreader) Sorting facility Quality control Spray equipment Storage facility facilities All equipments listed to be Agricultural input *Only small holder farmers with more required by the small holder distribution and sales than 2ha of land would be fully farmers. centre mechanised. Retail facility Training centre Student and staff housing Logistics and transport facility
Logistics Smallholder farmers should be The FPSU should organise Primary The same transport will be Trucks will be required for organised into groups. Each group logistics collection centre in the form used to collect maizefrom the distribution of final should have a group head that would of silos where trucks with trailers would the FPSU to the AH for products to wholesales and communicate information from the pick up maize from various farms and processing. Indictating major retail outlets. farmers to the FPSU and also arrange convey it to these silos. that the transport facilities for delivery of inputs with the FPSU. It is would serve multiple suggested that there should be input *It should be noted that some of these purposes. collection centres which would serve transport facilities will be used to as small officies for the group heads. deliver farm inputs to the collection This group heads would work closely centres, after which it can be with the Packhouses and the FPSU. distributed to individual farmers. Harvesting : Certain days of the week
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
should be assigned for harvesting of potatoes during the harvest seasons. Farmers intending to harvest on certain days would notify the FPSU for necessary arragements.
Technology/ICT In order to boost their production Tracking devices on all vehicles to In order to remain The RMUC will provide efficiency, the SHF would require: prevent hijack and also to monitor the conversant with the Information Data base that Mordern tools, movements and locations of the current prices fetched on all the various basic units of mobile devices for subscription to drivers. the global, national and the Agri-Park can subscribe Apps. , to enble them receive Also, the FPSU would require local market, so as to be to. information from the RUMC on subscription to certain Apps from the able to strategically supply weather forecast, disease control RMUC to remain conversant with the maize/ maize products to e.t.c. current prices fetched on the global, the markets, the RUMC national and local market, so as to be would also require able to strategically supply maize/ subscription to certain maize products to the markets. Apps from the RMUC. This *It should be noted the same transport will enable the AH to facilitities would be used to service all remain informed. the basic units of the Agri-Park, therefore, all the Transportation facilities would have these tracking devices.
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Catalytic Project A catalytic project relating to maize farming is a local maize mill and silo, that should ideally be linked to the FPSU in Steve Tshwete LM (Middelburg). The maize mill and silo will be used for the storage and primary processing of maize farmed locally.
11.4 Proposed Development Concept – Vegetables The development concept for vegetables will focus on the primary production of vegetables in the district. The produce will then be transported to the FPSU for further processing, collection and distribution to the hub. Some of the produce will be sold as fresh produce which will not need further processing, these products can go directly to the market, Mpumalanga IFPM or RUMC. Further processing can take place at the FPSU and/or the AH. Packaging and storage of products will take place at the AH, this includes cold storage.
Table 11.3: Proposed Development Concept – Vegetables Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Key Role & The core role of the smallhoder Input supplies (such as seed, fertlizer, Some training, logistics, Market intelligence, assist Function farmers would be the primary pesticides, herbicides, e.t.c.), training Agro-Processing, farmers, and processors in production of vegetables and extension support, mechanisation storage/warehousing managing a nexus of support, local logistics support, some facilities, packaging contracts and large storage, and processing for local facilities; logistics. warehousing. markets, through-put of excess products to Agri-hubs. Location All smallholder farmers involved in All vegetable farmers will be As proposed by the The proposed location of vegetable production in the supported by all the FPSU(s) that would province, the Agri-Hub is to the RUMC is in Mbombela Nkangala District be situated in the District, be located in Dr JS Moroka (Ehlanzeni District), which LM. is also the capital of the Province and the location
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
for the Mpumalanga International Fresh Produce Market. This will be the only RUMC in the Province, in order to avoid duplication of resources. Human Resources The core HR personnel that the SHF The FPSU will provide the following The AH will provide the The RUMC will provide the would require from the FPSU are: HR/HR facilities; following HR; following HR; Extension officers Agricultural extension officier (2) Administrative IT expert/personnel (1) Agronomist / support office; manager (2) Administrative Reseachers Machine operators (2) / Local Quality control manager (1) Seasonal staffs (harvest labour) mechanisation centre and personnel (2) Training personnel Some permanent staff to workshops; Staffs to manage the Marketing agents (to manage day to day farm Agronomist ( for soil testing e.t.c.) Agro-Processing Facilate market operations. (2) facilities linkages, facilitate Researchers (2) Research and contracts with Voluntary/Established Demonstration wholesalers and major commercial farmers to mentor the personnel retail outlets and also small scale farmers (as many as Training personnel (1) to garther informatio possible). on prices at fresh produce market that would be communicated to the AH and FPSU).
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Training Small holder farmers would require One of the key function of the FPSU Some training would also be Training of training training on: best farm practices, use would be to provide training and required at the hub e.g. personnels on how to of tools and equipments, training on extension support on various farm Training of processing disseminate information to how to interpret market information practices, to the SHF. staffs on how to handle the SHF, AH and the FPSU. and ICT. The extension officiers that and operate various are conversant with vegetable processing equipment. production are well posiitioned to Training on best render this type of training. Also, practices, based on training can be provided by the well- changing demand and established commercial potato supply. farmers through a mentorship Training on new programme. Extension officiers innovations as they through the DAFF can also organise surface. Agri-shows, where farmers can express their concerns, and where training can be provided. Key The core activities of the small holder The core activities of the FPSU are: The core activities of the AH The core activities of the product/activities farmers are: Collection of vegetables from are: RUMC are: Land preparation SHF Receiving of maize Collection of final vegetable farming (planting, Transportion of vegetables to from FPSU products from the AH fertlization, disease control, the storerooms/cold storage Further Quality control; Maketing and irrigation e.t.c.) within the FPSU premises Processing of distribution of final Harvesting Some quality control vegetables: peeling, products to different Loading onto truks Weighing, sampling and chopping, packaging, wholesalers and
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
testing of maize etc. major retail outlets Drying, cleaning grading and Storage of products ; Exporting of final sorting maize Some marketing; products Transportation maize Transportion of Bulk storage of final destined for processing products to the RUMC. products directly from the farm to the AH Infrastructure/ The smallholder farmer would require The FPSU would require to put in place The AH would require to put The RUMC would require Equipment the following equipments, which can the following in place the following to put in place the be hired from the FPSU: equipments/infrastructure: equipments/infrastructur: following Tractor Transport ( e.g Bakkie or pick- Administrative facilities equipments/infrastructure Tilliing equipment up vehicles) Rental facilities : Bed former Small scale processing Agro-Processing Large warehouses/ Trailers and bins. facilities for local market facilities (peeler, slicer, holding facilities/ cold Solid set irrigation equipment Sorting facility etc.) storage Planter/fertiliser applicator Storage facility/ cold storage Packaging facilities Administrative Fertiliser equipment All equipments listed to be Quality control facilities facilities/ information (spreader) required by the small holder Agricultural input centre Spray equipment farmers. distribution and sales centre *Only small holder farmers with more Retail facility than 2ha of land would be fully Training centre mechanised. Student and staff housing Logistics and transport
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
facility Logistics Smallholder farmers should be The FPSU should organise primary The same transport will be Trucks will be required for organised into groups. Each group logistics collection centre in the form used to collect vegetables the distribution of final should have a group head that of pack houses where trucks with from the FPSU to the AH for products to wholesales would communicate information trailers would pick up vegetables from processing. Indictating that and major retail outlets. from the farmers to the FPSU and also various farms and convey it to these the transport facilities would arrange for delivery of inputs with the storage facilities serve multiple purposes. FPSU. It is suggested that there should be input collection centres which *It should be noted that some of these would serve as small officies for the transport facilities will be used to group heads. This group heads deliver farm inputs to the collection would work closely with the centres, after which it can be Packhouses and the FPSU. distributed to individual farmers. Harvesting : Certain days of the week should be assigned for harvesting of vegetables during the harvest seasons. Farmers intending to harvest on certain days would notify the FPSU for necessary arragements.
Technology/ICT In order to boost their production Tracking devices on all vehicles to In order to remain The RMUC will provide efficiency, the SHF would require: prevent hijack and also to monitor the conversant with the current Information Data base Mordern tools, movements and locations of the prices fetched on the that all the various basic mobile devices for subscription drivers. global, national and local units of the Agri-Park can to Apps. , to enble them receive Also, the FPSU would require market, so as to be able to subscribe to.
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
information from the RUMC on subscription to certain Apps from the strategically supply weather forecast, disease RMUC to remain conversant with the vegetables/ vegetable control e.t.c. current prices fetched on the global, products to the markets, the national and local market, so as to be RUMC would also require able to strategically supply maize/ subscription to certain Apps maize products to the markets. from the RMUC. This will enable the AH to remain *It should be noted the same transport informed. facilitities would be used to service all the basic units of the Agri-Park, therefore, all the Transportation facilities would have these tracking devices.
Catalytic Project
A catalytic project relating to local vegetable farming is the development of a vegetable pack house for the washing, sorting, grading and packaging of local produce. Some retail activities and basic processing (chopping, peeling, etc.) can also take place at the pack house.
11.5 Combined Proposed Development Concept for Nkangala District As the programmes continues to develop and other commodities are included, a concept similar to the ones above will be implemented. Table 11.4 provides a combined concept that refers to the Agri-Park programme overall.
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Table 11.4: Proposed Combined Development Concept Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Key Role & The key function of farmers is the The FPSU should provide support The AG should provide training, Market intelligence, assist Function production of maize, cattle (for to farmers, not only with input logistics, Agro-Processing, farmers, and processors in beef) as well as vegetables to be supplies and equipment, but also storage/warehousing facilities managing a nexus of contracts delivered to the FPSU. with training and farming support and packaging facilities and large warehousing. as well as serving as an central location for collection of produce. Location All farmers in Nkangala District The Disrict should ideally have at The Agri-Hub is situated in Dr JS The proposed location of the involved in livestock least 9 FPSUs strategically Moroka LM RUMC is in Mbombela (Ehlanzeni propoduction, vegetable located throughouth the District. District), which is also the capital production (potatoes, It will be beneficial if there is one of the Province and the location cabbages and carrots) as well as in each LM. Local Municipalities for the Mpumalanga maize. Vegetable production with higher density can have International Fresh Produce takes place mostly in Dr JS more than one FPSU in order to Market. This will be the only Moroka LM, Thembisile Hani LM provide small and emerging RUMC in the Province, in order to and Victor Khanye LM. Maize farmers with easy access to avoid duplication of resources. production is spread throughout inputs and equipment. the District but especially in Potential locations include: Emalahleni LM and Steve Emalahleni LM (Emalahleni) Tshwete LM. Livestock profuction Steve Tshwete LM is also spread throughout the (Middelburg & Hendrina) District. Emakhazeni LM (Emakhazeni) Dr JS Moroka LM (Marapjane & Magareng)
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Thembisile Hani LM (Kwaggafontein & Kameelpoortnek) Victor Khanye LM (Delmas) Therefore, at least 9 FPSUs will be distributed through-out the district. All farmers will be supported by the FPSUs. Farmers are encouraged to use FPSU’s closest to the farm locations. FPSU’s will not be exclusive to one commodity but where possible services and infrastructure may be shared. FPSUs will be centrally located where there is a concentration of farms. Human The core HR personnel that the The FPSU will provide the The AH will provide the following The RUMC will provide the Resources farmers would require from the following HR/HR facilities; HR; following HR; FPSU are: Administrative manager (2) IT expert/personnel (1) Extension officers Agricultural extension Quality control personnel (2) Administrative manager (1) Agronomist officier (2) / support office; Staffs to manage the Agro- Training personnel
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Reseachers Machine operators (2) / Processing facilities Marketing agents (to Veternarian Local mechanisation centre Research and Facilate market linkages, Seasonal staffs (harvest and workshops; Demonstration personnel facilitate contracts with labour) Agronomist (for soil testing Training personnel (1) wholesalers and major retail Some permanent staff to e.t.c.) (2) Staff for the abbatoir outlets and also to garther manage day to day farm Veternarian/ livestock informatio on prices at fresh operations. specialist produce market that would Researchers (2) be communicated to the Voluntary/Established AH and FPSU). commercial farmers to mentor the small scale farmers (as many as possible). Training Small holder farmers would One of the key function of the Some training would also be Training of training personnels on require training on: animal FPSU would be to provide required at the hub e.g. how to disseminate information welfare, best farm practices, use training and extension support Training of processing staffs to the SHF, AH and the FPSU. of tools and equipments, training on various farm practices, to the on how to handle and on how to interpret market SHF. operate various processing information and ICT. equipment. Training on best practices, based on changing demand and supply. Training on new innovations as they surface. Training and animal welfare
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
and food safety Key product/ The farmers should perform all The core activities of the FPSU The core activities of the AH are: The core activities of the RUMC activities necessary farming activities in are: Receiving of produce from are: order to deliver good quality Collection of produce FPSU Collection of final products maize, carrots, potatoes and from farmers Quality control; from the AH cabages to the FPSU which will Quality control Processing of vegetables Maketing and distribution of be suitable for processing and Weighing, sampling, and maize final products to different retail. Livestock farmers should testing, sorting and Slaughtering cattle and wholesalers and major retail be able to manage herds to cleaning of maize and packaging meat outlets deliver disease free and healthy vegetables Storage of products ; Exporting of final products cattle which ware suitable for Assisting with disease Some marketing; Bulk storage of final the meat market. and pest control Transportion of products to products Transporting produce the RUMC. and cattle to the AH
Infrastructure/ Equipment required by farmers Equipment at the FPSU includes Infrastructure required at the AH The RUMC would require to put in Equipment which can be hired by the FPSU all the equipment needed by includes: place the following include: the farmers, as well as: Offices equipments/infrastructure: Tractors Sorters Training facility Large warehouses/ holding Transport equipment Packhouse feeding line Warehouse and processing facilities/ cold storage Handling equipment Washer facilities Administrative facilities/ Pens Crates Cold storage information centre Feed storage The infrastructre at the FPSU Agricultural input distribution Troughs includes: and sales centre Feeders Cold storage
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Tilling equipment Mechanisation centre and Planters and seeders workshop Fertiliser/lime spreader Retail facility Mist sprayer Auction facility Grain carts Training facility Bulk bags Office Harvestor Pens for cattle Logistics The focus of the logistics plan is to develop a strategy to move farm produce to market as smallholder and emerging farmers seek to become important players in the emerging food supply chain in South Africa. The logistics plan draws on challenges and opportunities faced by the farmers that are likely to participate within the Agri-Parks programme, while the focus remains on recognising the importance that transport plays in the emerging farmer value chains.
Understanding the logistics chain It is important that the transport segments in the emerging agricultural sector are understood. The segments include the primary, intermediate and final transport route segments, described in further detail below:
1. The primary transport segment, also known figuratively as the first mile, is the segment in which product moves from farm to a consolidation/collection point that are found on primary roads where collection is typically easier. The key role-players in this segment are the farmers who move the produce from their farm to the consolidation/collection point. 2. The intermediate transport segment realises the movement of produce from the primary consolidation, or collection point to an intermediate point, or in this case an Agri-Hub. The key role-players at this point are larger, commercial farmers, or transporters. 3. The final transport segment will move product from the intermediate point to the final market, or destination.
These segments are exemplified in the following figure:
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
Primary Intermediate Final transport transport transport segment segment segment Market (Export and Farm Collection points Processing international)
The above figure is a generic emerging, or small-scale farmer’s logistics chain that contains the farm, consolidation/collection points, intermediate processing points and the final markets for the product. The first mile, in general, is the most important segment since it can be the most expensive segment of the logistics chain. It is often the case that product quality is compromised through bruising and ageing in this segment.
Technology/ICT In order to boost their production Tracking devices on all vehicles In order to remain conversant The RMUC will provide efficiency, the SHF would require: to prevent hijack and also to with the current prices fetched Information Data base that all Mordern tools, monitor the movements and on the global, national and local the various basic units of the Agri- mobile devices for locations of the drivers. market, so as to be able to Park can subscribe to. subscription to Apps. , to Also, the FPSU would require strategically supply vegetables/ enble them receive subscription to certain Apps from vegetable products to the information from the RUMC the RMUC to remain conversant markets, the RUMC would also on weather forecast, with the current prices fetched require subscription to certain disease control e.t.c. on the global, national and local Apps from the RMUC. This will market, so as to be able to enable the AH to remain strategically supply maize/ maize informed. products to the markets. *It should be noted the same transport facilitities would be used to service all the basic units
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Production Flow Smallholder farmers (SHF) FPSU AH RUMC
of the Agri-Park, therefore, all the Transportation facilities would have these tracking devices. Possible Not only will the Agri-Parks project contribute to overall economic growth and formal employment in different sectors, but it will also Economic contribute to local skills development, temporary employment during the construction phases and local exports. Benefit In Nkangala DM, nearly 17,000 hectares are targeted through the Agri-Parks programme of which 6, 500 hectares are commercial farms. The programme will provide assistance to 1,000 small holder farmers. Should the Agri-Park programme be successfully and sustainable implemented with all targets reached, between 6,000 and 9,000 employment opportunities can be created on targeted small holder farms1.
Along with the increase of employment on local farms, the components of Agri-Park, namely the FPSUs and the Agri-Hub will also create significant employment opportunities depending on the success of the implementation of the Agri-Parks Model
11.6 Farmer Production Support Units As indicated in the agri-park development concept, there will be a number of Farmer Production Support Units (FPSU) in the District. Table 1.5 illustrates the location, main commodities in the area as well as the priority of the FPSU. Due to the number of FPSUs in the District they need to be prioritised and implemented over 10 years to accommodate budget and resource restrictions.
1 Based on estimates from Mpumalanga DARDLEA, 2015/2016
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Table 11.5: Farmer Production Support Units (Prioritisation) Municipality Location of FPSU Main Commodities Priority Dr JS Moroka LM Marapjane Vegetables Phase 1 Magareng Beef Phase 3 Thembisile Hani LM Kwaggafontein Vegetables Phase 1 Beef Kameelpoortnek Phase 3 Maize Steve Tshwete LM Middelburg Vegetables Phase 1
Hendrina Beef Phase 4 Maize Emalahleni LM Emalahleni Vegetables Phase 2 Beef Maize Victor Khanye LM Delmas Vegetables Phase 1 Beef Emakhazeni LM Emakhazeni Vegetables Phase 2 Beef
It is estimates that phase 1 of implementation should focus on FPSU with the highest priority with regards to locations of existing emerging and small scale farmers. Phase 1 should be implemented within the first three financial years while phase 2 needs to be implemented next 4 financial years. Phase 3 and 4 needs to be implemented over the next 10 years as the budget allows.
11.7 High-level Costing (CAPEX) The Tables below indicates the capital needed for the Farmer Production Support Units, the Agri-Hub as well as for the Rural Urban Market Centre.
Table 11.6: CAPEX – FPSU Category Amount (R) Consolidation/Collection Point 1 844 940.00 Buildings 2 711 340.00 Infrastructure 4 222 450.00 Equipment – Beef 4 153 306.00 Equipment – Vegetables 8 410 535.00 Equipment – Maize 6 841 253.00 Total 28 183 824.00 Table 1.6 lists the average equipment needs for each FPSU
The average capital requirement for one FPSU is R28.1 million (Table 1.6). Not every FPSU will
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have the same capital requirement due to different equipment needs which is largely dependent on the local agricultural needs.
Table 11.6: CAPEX – Agri-Hub Category Amount (R) Buildings 23 536 800.00 Infrastructure 17 672 750.00 Transport Vehicles 5 000 000.00 Equipment – Beef 28 000 000.00 Equipment – Vegetables 5 000 000.00 Equipment – Maize 7 000 000.00
Total 86 209 550.00
Table 11.7: CAPEX – Total Unit Quantity Amount (R) FPSU 9 275 485 145.00 Agri-Hub 1 86 209 550.00 Total 361 694 695.00
11.8 Conclusion The Diagram below provides a brief summary of the proposed development concept for the Agri-Park in Nkangala as well as the capital requirements for each component of the model. In order to have a successful Agri-Park in Nkangala District it is important that all participating farmers receive the necessary training, support and equipment to enable them to provide good quality and sufficient amounts of produce to sustain all processing activities.
Diagram 11.1: Proposed Development Concept Summary
FPSU (x9) RUMC •Processing and (Mbombela) •Maize •Equipment and storage •Admin •Vegetables support •Support •Storage •Beef •Sorting, storage •Capital •Retail etc. required: R86 Farmers •Capital •Capital required: 209 550.00 R275 485 145.00 Agri-Hub
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12 Organisational Structure 12.1 Introduction The organizational structure for the Agri-Park in Nkangala DM can be summarised in the Diagram below.
Diagram 12.1: Agri-Park Organisational Structure
The organizational structure for the Agri-Park can be subdivided into three broad categories: 1. Advisory Structures 2. Approval Structures 3. Implementation and Monitoring Structures
Each of the abovementioned structured will be discusses in detail in this section.
12.2 Advisory Structures The main functions of the advisory structures within the Agri-Parks organisational structure are to give advice to the approval structures. The advisory structures that are currently identified are the National Agri-Parks Advisory Council (NAAC) and District Agri-Parks Management Council (DAMC). It is important to note that the advisory structures’ member primarily comprise of stakeholders and interested parties.
12.2.1 The NAAC This council reports directly to the minister and consists of elected representatives of various organisations. Functions of the NAAC may include (as stipulated in Circular 9 of 2016): To solicit, co-ordinate and advise the Executive, on issues and concerns of the
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implementation of the Agri-parks Programme; To encourage public awareness and education of the Agri-parks Programme; To review studies, plans and proposals as may be referred by the Executive and District Agri-parks Management Councils (DAMCs) and the National Agri-parks Operational Task Team, and to provide comments and advice thereon; To provide advice on policies, legislation and programmes from the Department of Rural Development and Land Reform (DRDLR) that impact on the Agri-parks Programme; To initiate advice on the Agri-parks Programme and implementation of the business plans as referred to by the DAMCs; To liaise with the Executive, the Management of the DRDLR, the DAMCs and any other stakeholder involved in the Agri-parks Programme as required; and To mediate disputes arising from the DAMCs concerning its operation and/or advice provided to the Department or other bodies that are implementing the Agri-parks programme in Nkangala DM.
12.2.2 The DAMC The District Agri-Parks Management Council, also referred to as the “voice” of the stakeholders/interested parties in Agri-Parks. The DAMC, like the NAAC consist of representatives from various organisations. The DAMC’s main function is to communicate advice from the council members to the NAAC as well as DAPOTT (District Agri-Parks Operational Task Team). Further functions of the DAMC include, but are not limited to the following: Assist in identifying new business opportunities within an Agri-park; Provide advice on the implementation of the business plans; To advise on regulatory compliance with applicable policies and legislation; To advise on the alignment with the National Development Plan, Agricultural Policy Action Plan, Provincial Growth and Development Strategies and other development frameworks; and To assist in the identification, evaluation and monitoring of risks related to projects.
12.3 Approval Structures These structures are responsible for approvals, feedback, information sharing, monitoring and evaluation regarding land reform activities and Agri-Park project approval. To explain the functioning of the approval structure it essential to understand that in terms of the Agri-Parks organisation the project approval process is started on the district level.
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The approval structures that form part of the Agri-Parks include the DAPOTT, District Land Reform Committee, Provincial CRDP (Comprehensive Rural Development Programme) Committee, National Development Approvals Committee (NDAC) and the National Land Allocation and Recapitalisation Control Committee (NLARCC). Note: It is understood that both the DLRCs and DAMCs can recommend projects/producers to be considered to be part of Agri-Parks.
12.3.1 DAPOTT The DAPOTT as part of the Agri-Parks Approval Structure receives advice from the DAMC as well as information from PAPOTT and NAPOTT. DAPOTT appears to have the role to interpret all the information and acting as a monitoring agent to advise on projects and land reform beneficiaries to be included in the Agri-Parks. Some of the functions of the DAPOTT include but are not limited to: To provide technical support and guidance for implementation; To provide oversight of the implementation of the district Agri-parks business plan; To monitor expenditure against the district Agri-parks business plan; To identify all district projects that contribute to the district Agri-parks business plan and to compile a district project register (all DRDLR branches); To monitor project implementation against the approved project plan and district Agri- parks business plan; To participate in the identification and packaging of local development projects in support of the mandate of the Department of Rural Development and Land Reform; To advise on proposals that should be submitted to the Provincial CRDP Committee; and To provide an oversight function and monitor the implementation of the Government’s Rural Development Programmes.
The Agri-Hub Operational Manager The main function of the Agri-Hub Operational Manager is to oversee the implementation of the Agri-Hub. Such person is to be appointed at the district level and should report directly to the district operational task team.
The FPSU Operational Manager The main function of the FPSU Operational Manager is to oversee the implementation of the FPSU. Such person is to be appointed at the district level and should report directly to the district operational task team.
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12.3.2 DLRC The District Land Reform Committees (DLRCs), are primarily concerned with land reform in general. However, the DLRCs have additional functions linked to Agri-Parks: To identify the district projects contributing to Agri-Parks business plans; and To align projects and beneficiaries with the identified sites for Agri-Parks. The abovementioned functions are however secondary to the following main functions: Identify farms suitable for acquisition by Government (the target is 20% of agricultural land per district); Identify and interview potential candidates for farm allocation; Advise the Minister on the strategic support needs of identified farms and support needs of recommended candidates; and Advise the Minister on resolving land rights conflicts, as might be referred to a DLRC by him/her.
Note: Projects and or beneficiaries identified by the DLRCs and DAPOTT, are subjected to technical compliance checks before being passed onto the PCRDP.
12.3.3 PCRDP The PCRDP functions as the provincial approval structure that passes projects/beneficiaries identified by the DLRCs and DAPOTTs onto the National Government structures. Regarding this specific structure within the Agri-Parks organisational structure the name of this structure may have changed to the PJSC (unknown) as suggested in a different schematic (see below). The projects/beneficiaries identified are then catalogued into a Provincial Project Register that contributes to the formulation of a provincial spatial target plan. The functions of the PCRDP include: To provide inputs to assist in the compilation of the provincial spatial targeting plan, as provided by the districts; To recommend all development, land acquisition and tenure projects in line with a Delegation of Authority Framework to the NLARCC and NDAC through its technical committees; and To provide an oversight function in relation to the work of the Provincial Technical Committees and District CRDP Committees, to eliminate disjuncture and to ensure alignment of projects and funding at a provincial level. To provide an oversight function in relation to the work done by the District Operational Task Team. The Task Team is the link between the PCRDP, the DAMC and the Provincial Operational Task Team. The Agri-Hub Operational Manager as well as the FPSU Operational Manager will also report to the Task Team
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The PCRDP can also include specialists if specialist skills are required to inform decisions to be made regarding project selection.
Projects and or beneficiaries chosen by the PCRDP are subjected to technical compliance checks before being passed onto the NLARCC and the NDAC.
12.3.4 The NLARCC The function of the NLARCC is to recommend land acquisition and recapitalisation projects to the MCM (Ministerial Coordinating Management committee). The full list of functions of the NLARCC is as follows: To provide inputs to assist in the compilation of the national spatial targeting plan as provided by the provinces; To identify all national projects as per operational plans and compile a national project register To approve land acquisition, tenure and recapitalisation and development projects in line with a delegation of authority framework; and To provide an oversight function in relation to the work of the National Technical Committee and Provincial Committees, to eliminate disjuncture and to ensure alignment of projects and funding at a national level.
Looking at the above function, the NLARCC and PCRDP have the same functions but only on different levels within the government.
12.3.5 The NDAC The main function of the NDAC is to approve all the national development projects and to give oversight to the PCRDP committees and the National Technical Committees (NTCs part of the land reform approval process). The functions of the NDAC are almost the same as the functions of the NLARCC, but the NDAC does not play a role in the identification of projects or the approval land acquisition, tenure recapitalisation and development projects.
12.4 . Implementation and Monitoring Structures Currently there are only two structures within the Agri-Parks organisational structure that are solely dedicated to implementation and monitoring, the PAPOTT (provincial Agri-Parks Operation Task Team). PAPOTT and NAPOTT are however not exclusively dedicated to Agri- Parks, these two structures also play a role in the monitoring and implementation of other programmes that can influence the Agri-Parks programme.
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Diagram 12.2: Organisational Structure – Monitoring and Implementation
12.4.1 NAPOTT The NAPOTT has various functions that are focussed towards on the operation of Agri-Parks both in terms of implementation and on-going operation. These functions include but are not limited to: Developing the National Agri-Parks Plan; Contributing to the development guidelines of Agri-Parks; Monitoring provincial business plans against the abovementioned guidelines; Monitoring budget alignment as set out in the business plans; Giving inputs to assist in the compilations of provincial Agri-Park business plans; and Managing project roll out of Agri-Parks in line with approved project plans nationwide.
12.4.2 PAPOTT The main functions of the PAPOTT is to coordinate and facilitate integrated implementation of Agri-Parks by providing technical support regarding planning and implementation, giving inputs to the compilations of Agri-Parks Business plans etc.
Note: PAPOTT will only remain operational until the Agri-Parks programme has reached a sustainable level, then PAPOTT will be integrated with the PCRDP.
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13 Implementation Guidelines
13.1 Introduction The following implementation guidelines provide an overview of what should be achieved in order to successfully implement the Agri-Parks programme within the Ehlanzeni District. The implementation guidelines provide valuable information about:
Understanding the implementation process and what is required for the process. How to align the implementation of the Agri-Parks programme with various government initiatives in developing agriculture. Recommendations that will streamline and assist the development of the Agri-Parks programme. Steps to be taken in developing the Agri-Park in the form of a roll-out plan.
This final Section lays out the implementation guidelines and planning required to implement the Agri-Parks programme within the Ehlanzeni District, starting with the implementation process.
13.2 Implementation Process The implementation process of the Agri-Park Model within South Africa is as follows: Step 1: Agri-Parks Model The Department of Rural Development and Land (DRDLR) reform developed the Agri- Park model in the first step. Step 2: Selection of the 44 District Municipalities The DRDL proceeded to select the 44 Districts across South Africa in which the model will be implemented over the next 10 years. Step 3: Agri-Hub location selection The locations of each Hub was selected based on a set of criteria
Step 4: Master Agri-Park Business Plan A master Agri-Park business plan was developed for each of the 44 Districts.
Step 5: Governance Strategies bodes and plans will be formed including the definition of ownership and management structures. Step 6: Funding Model A financial gearing plan will be developed for each Agri-Park. Step 7: Technical planning The technical aspects of the Agri-Park will entail planning, mainly, the physical
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construction of the Agri-Park along with related infrastructure and technologies Step 8: Detailed business plans The different units of the Agri-Park (FPSU, AH and the RUMC) as well as the farmers will have specific detailed business plans developed. Step 9: Funding close Funding will be sourced from various financial institutions, depending on the funding model. Step 10: Construction The construction of the Agri-Park’s units and other related infrastructure will start. Step 11: Farmer production FPSUs will be up and running in order to make assistance available for farmers to start production through the Agri-Park Step 12: Training programmes roll-out Training programmes will commence through the FPSUs. Step 13: Agro-processing Once primary production has taken place, and products are ready, agro-processing activities will commence through the Agri-Park’s AH. Step 14: Market Completed products will be distributed and sold to relevant markets through assistance of the RUMC
In order to avoid duplication of existing government programmes, it is necessary that the identified steps in the Table above are aligned to current programmes and projects, which is discussed in the following sub-section.
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13.3 Alignment with Government Programmes
Table 13.1: Government Programmes Programme/Project/ Description Alignment Campaign Agricultural Programmes Agricultural Broad-Based The implementation of AgriBEE is based on the commodity The Agri-Park will focus on the development of the value Black Economic value chain approach. The approach is fundamental in chains for each of the identified commodities. Empowerment (AgriBEE) creating partnerships, linkages, and networks for balanced, In developing the value chain there needs to be a focus on mutually benefiting results for all concerned. The AgriBEE is integration of all stakeholder to be involved. expected to ensure enhanced competitiveness and Integration of the value chain will create partnerships and sustainable development with expansion of the existing linkages that will be mutually beneficial for all stakeholder businesses, rehabilitation of agricultural business that are involved and enhance the competitiveness of the Agri-Park. performing poorly and expanded entry for new businesses in Stakeholder engagement is required to encourage the sector. partnerships that are beneficial from farmers to markets.
AgriBEE also encourages partnerships between established agricultural enterprises and emerging farmers and entrepreneurs. Comprehensive The programme provides agricultural support to land and The Agri-Park should work closely with CASP projects to Agricultural Support agrarian reform projects, which contributes towards food support the initiatives set out within CASP. Programme (CASP) security, job creation and poverty alleviation. Policy alignment is key to achieve a common set of goals. The Agri-Park should focus on job creation through various CASP is also involved in the development of a number of initiatives, especially primary agriculture where there is policies, strategies and projects that are geared toward the potential for many job opportunities. development of the agricultural sector. These include:
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Programme/Project/ Description Alignment Campaign The Agri-Park should investigate initiatives to extend credit to Agricultural finance lending farmers. Co-operatives establishment The Agri-Park needs to encourage and manage the Access to markets establishment of co-operatives. Value chain development Management practices need to be implemented at various Improvement policies stages of the value chain in order to ensure consistent Production guidelines production and product quality. Agro-logistics planning Information technology should inform all stakeholders within Early warning climate systems the value chain. Integrated Food Security This programme was initiated by the Food and Agricultural A major objective of the Agri-park is to improve food security. and Nutrition Programme Organisation (FAO). The core goal of this initiative was to Primary production should be a key focus of the Agri-Park. (IFSNP) reduce hunger and food insecurity. To take further steps The Agri-Park will therefore be required to improve access to toward achieving this objective, the Special Programme for markets through engaging the markets and meeting the Food Security (SPFS) will be expanded to all nine provinces requirements of the market procurement policies. (DAFF, 2016). The SPFS and CASP have collaborated, and as a result 10% of the total CASP budget will also be aligned to projects that contribute directly towards food security (DAFF, 2016). Research and The programme encourages research and development Training forms part of the Agri-Parks many roles. Development (R&D) within the realm of agriculture and involves all stakeholders Training requires research and development initiatives that within the national agricultural research system. should align with R&D programmes set out by government. R&D is required throughout the value chain and will be required to evolve as technologies do.
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Programme/Project/ Description Alignment Campaign National Regulatory The increased trade in regulated agricultural products has The Agri-park should implement policies that enforce Services (NRS) required the development of the NRS that regulates and international standards on production and processing that promotes international trade. This includes inspections of will allow the programme access to international markets. agricultural produce and bilateral negotiations. In addition, the NRS promotes awareness with respect to agricultural produce health matters. LAND and AGRARIAN The objectives of LARP are the redistribution of land, The Agri-Park forms part of the market for farmers and will REFORM PROJECT (LARP) increased black entrepreneurship, promoting access to therefore encourage production. agricultural support services, increased agricultural Models are to be developed to distribute state own land and production, and increased agricultural trade. ensure land tenure is in place for producers. Access to the market through the Agri-Park will further The programme builds on lessons that have been learnt from encourage land that was previously not in production to previous land reform projects, reviews, the Land Summit and produce. implementation reforms. LandCare The LandCare programme was established to promote Access to the market through the Agri-Park will further productivity through the sustainable use of natural resources, encourage land that was previously not in production to to improve food security and create employment, therefore produce. encouraging South Africans to use sustainable methods of The Agri-Park is to encourage the sustainable use of land and cultivation, livestock grazing and harvesting of natural resources. resources in order to limit land degradation. Small Holder Farmer The programme focuses on the integration of smallholder The Agri-Park will manage and encourage smallholder Evaluation farmers into the greater agricultural value chain. The production, a primary objective of the Agri-park. programme works in conjunction with other programmes and Logistics and management plans are key to the success of provides strategic agricultural support. integration of smallholder farmers.
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Programme/Project/ Description Alignment Campaign Rural Development Programmes Comprehensive Rural The CRDP is in place to create decent work and sustainable The Agri-park encourage primary production. Development Programme livelihoods. The programme ensures sustainability, communal Will have support mechanisms in place to ensure best (CRDP) ownership and effective contribution toward the objectives production methods. of developing rural areas. Create jobs in primary agriculture. Ownership models encourage social cohesion, integration The overarching objective of the CRDP is social cohesion and and participation from all stakeholders. integrated development through participatory approaches and partnerships with all sectors of society. National Rural Youth Narysec is a youth skills development and employment The Agri-Parks programme will encourage youth to Service Corps programme programme that also forms part of the CRDP. participate in agriculture by creating viable and attractive (Narysec) agricultural enterprises. The programme also provides character building programmes, soft and hard skills training and dispatches youth to rural areas for rural development projects. The programme further transforms the youth of rural areas, from being job seekers to being job creators. Rural Enterprise and REID is in place to facilitate poverty reduction, social The Agri-park encourage primary production. Industrial Development organisation, youth development and the development of Will have support mechanisms in place to ensure best (REID) cooperatives, rural enterprises and industries. production methods. Create jobs in primary agriculture. Ownership models encourage social cohesion. GDARD Agri-Hubs The GDARD seeks to develop Agri-Hubs that will result in the Similarities in the programmes are complementary and will Development growth of the local agricultural sector through integrated align accordingly. agricultural value chains.
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13.4 Recommendations The business plan has highlighted what needs to be done in the way of developing the agricultural sector within the District. Challenges have been highlighted and recommendations have been made in order to streamline the implementation process. The following list of recommendations has been developed and should be considered for the development of the Agri-Park in the Ehlanzeni District.
1. Infrastructure Where necessary, roads should be upgraded or developed, especially in rural areas, in order to provide ease of access to transport vehicles who have to distribute inputs and produce between the various components of the Agri-Park model (farmers, FPSU, AH and RUMC). Available existing infrastructure that can be should be revitalised so that they can be used in support of the Agri-Park
2. Natural Resources Water is a scarce resource and necessary for agriculture. Water management systems should be put in place so that water can be sustainably used within the Agri-Park. Distribution and water allocation plans should be developed and irrigation schemes implemented in the major production areas, while maximising the use of existing infrastructures. Rain harvesting by means of Jojo tanks can assist smallholder farms with water available, especially in dryer areas It is critical for long term agricultural development that all natural resources, including soil, be managed sustainably. Farmers should be assisted with crop- and livestock management in order to minimise effects such as overgrazing or erosion
3. Agri-Parks commodities The Agri-Park should implement Best Practices in production in order to produce quality products that that meet international standards. This means that all produce should be handled hygienically and safely (in order to keep to Health and Safety regulations) and that all packaging and labelling comply with internal standards. These are all factors that will contribute to enhancing the products’ suitability for the export market. As part of the long term expansion plans for the Agri-Park, processing facilities should be developed beyond that of the three identified commodities in order to promote value chain development of other crops and livestock within the District.
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In order to diversify production and spread risk, the Agri-Park should not be limited to only the production of vegetables, poultry and agroforestry products.
4. Technology In order for farmers to make proper use for technological tools available such as mobile apps, it is necessary to ensure that telecommunication services be upgraded, such as the erection of cell towers, especially in rural areas It is also recommended that any ICT to be introduced to farmers will be user friendly and easy to use by farmers, as some do not have high levels of education
5. Training Create partnerships with existing research institutions, as well as the University of Mpumalanga, especially at an FPSU and Agri-Hub level, who will be able to facilitate training programmes. Such partnership will assist in developing the necessary human capital. Create partnerships with local commercial farmers who can act as mentors to small and emerging farmers in order to assist with production and other skills development Practical manuals and information packages should be developed for the smallholder and emerging farmers to assist them in their production processes. These manuals and information packages should cover aspects relating to: regulatory requirements, information on support programmes, production guidelines, etc. Where possible, manuals should be developed in language of choice to enhance easy understanding. Training should be geared to agribusiness development Food safety training, occupational health training, animal welfare training etc. is also essential in developing human capital as well as the functioning of the Agri- Park
6. Agri-Parks Units The RUMC should be should be strategically located to be close to the Kruger Mpumalanga International Airport as well as the Mpumalanga International Fresh Produce Market in order to take advantage of potential export opportunities. There should be further investigation in order to identify the ideal site for the RUMC The various FPSUs should be located in productive farm areas that have a potential for primary production. FPSUs should be developed in accordance to the Ehlanzeni Rural Development Strategy. In order to streamline logistics between the different units, it will be beneficial to
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develop an inventory map that indicates the locations of all the farmers earmarked for production within the Agri-Park. The production areas should all be grouped into zones and FPSUs be located within these zones. Each entity within the Agri-Park (FPSU, AH and RUMC as well as the farmers) should have a separate business plan detailing operations, roles and responsibilities of each respective entity within the Agri-Park
7. Logistics In order to promote ease of access to markets, a comprehensive logistics plan needs to be developed which investigates the various methods of moving produce from the farm to the final market. Smallholder farmers with small production capacities should be encouraged to work in joint ventures in order to participate in supplying the Agri-Park. The District Agri-Parks Councils should engage with other departments and be responsible for the implementation of the Agri-Parks. A representative body must take ownership of the Agri-Park and implement the project. This body should represent all stakeholders, public and private, within the Agri-Park.
8. Policies In order to facilitate a fully integrated Agri-Parks programme, policies should be set in place to promote partnerships between the different Districts as well as cross- border relationships. These policies will be necessary if Districts needs to share infrastructure or resources. Policy around land ownership should be revised such that it provides security of tenure to farmers. Ownership of land encourages farmers to invest in their land and encourages borrowing for financing activities. Ownership of land encourages productivity and is therefore mutually beneficial for the farmer and the Agri-Park Monitoring and evaluation is essential; it is thus necessary to develop a strategic plan that can be used to monitor the development of the Agri-Park 9. Funding/investment Creating incentives and funding mechanisms will assist to encourage local investment and attract foreign investment. Attracting investment is essential for the development and implementation of the Agri-Park.
10. Integrated development Tourism needs to be encouraged within the Agri-Park. Agri-tourism opportunities should thus be developed; this can be done through farm activities and tours or tours through processing facilities.
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11. Market District should form partnership with some of the existing main players in the various industries to enable them penetrate local and international market. The management of the Agri-Park, or RUMC must be responsible for linking the farmers to the market. The RUMC must play a role as the representative body for all farmers participating in the Agri-Parks programme and assist the farmer in access to the market.
Partnerships should be established with commercial and semi-commercial farmers. Commercial and semi-commercial farmers often have a track record and understand the requirements of the market. As such, smallholder and emerging farmer would be able to piggy back on the more established farmers in order to gain the required skills needed to access the market.
12. Incentive programmes Develop incentive programmes that will attract the youth and woman into a career in agri-business and farming, for example, by means of scholarships. Participating farmers should be provided incentives in order to encourage them to create sustainable farms that will be able to deliver good quality produce. It is essential for the success of the agro-processing facilities that there is a steady income of good quality produce.
13.5 Roll-out Plan Implementation is a crucial element in any strategy and needs to be adhered to realistic timeframes and role-players. This subsection focusses on the implementation actions for the elements as discussed within this document. The implementation plan is structured in a way that it follows a phased approach in order to prioritise the necessary actions that will help in facilitating an enabling environment for the establishment of the Agri-businesses within the Agri-Park.
The best approach for the Agri-Park formulation is in a phased manner, this implies that there are short, medium and long term actions that need to be implemented in order to bring the Agri-Park from identification to implementation. These actions or goals are structured in accordance with the theoretical foundations to the formation stages of a park. These stages are illustrated in the below and show the actions to be taken over the project duration. The main implementation actions associated with each term will be discussed with their details thereafter.
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The roll out plan is illustrated below – indicates a step-by-step plan that should be followed.
Figure 13.1: Roll Out Plan
Year 1 2 3 4 5 6 7 8 9 10
Establish governance structures Funding model Technical planning Detailed business plans Financial close Construction Farmer production Training programmes roll-out Agro-processing Market
The implementation of the Agri-Park should be done through a phased approach as seen in the Diagram below.
Diagram 13.1: Agri-Parks Phase Implementation Approach •Short Term: Pre-Hub and emerging Hub phase Monitoring and Evaluation •Medium Term: Expanding Hub phase •Long Term: Hub Evolution
The Table below indicates some the activities that should be done in each phase of development. Table 13.2: Development Activities Phase Activities Short Term Pre-Hub Formation: Creation of AH forum Approval and adoption of Agri-Parks Master Plan Develop necessary policy and strategic frameworks for the implementation and development of the Agri-Park Identify participating farmers
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Phase Activities Develop site layout, detailed architectural- and engineering plans for infrastructure requirements Stakeholder engagement Emerging Hub Phase: Start companies and trusts for the relevant agri-businesses Appoint necessary service providers Identify training needs and appoint service providers to provide training Provide farmers with required infrastructure Identify and establish contracts with farmers who will act as suppliers (commercial and emerging) Identify private investment opportunities Identify markets and develop marketing strategies Medium Term Operation Phase of Hub: Identify spin off opportunities in the local communities Expand role of FPSUs in order to widen the scope and influence of agro-processing facilities Provide additional training in business management to entrepreneurs and SMMEs Expand and solidify markets Expand emerging farmers’ capacity to produce Upgrading and expansion of infrastructure and facilities Long Term Agri-Hub Evolution: Expand strategic approaches and address potential challenges across value chain Further solidify markets/market assessments to facilitate expansion of new markets Diversifying products Identify forward and backward linkages Decrease the involvement and duties of the DRDLR within the Hub Expand agro-businesses and suppliers list Identify and promote agglomeration opportunities locally and with other Hubs nationally
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14 References
1. ABSA, 2015. Agricultural Outlook 2015 2. Abstract of Agricultural Statistics 2015. Department of Agriculture, Forestry and Fisheries. Republic of South Africa. 3. BFAP Baseline. Agricultural Outlook 2015-2024. July 2015 4. DAFF, 2015a. Abstract of Agricultural Statistics, Pretoria: Directorate Statistics and Economic Analysis. 5. DAFF, 2015b. Newsletter: National Livestock Statistics, Pretoria: Department of Agriculture, Forestry and Fisheries. 6. DAFF, 2015C. Trends in the Agricultural Sector, 2014. Department of Agriculture, Forestry and Fisheries, Pretoria. 7. Department of Agriculture, Forestry and Fisheries (DAFF). 2014. Agricultural Policy Action Plan (APAP) 8. Department of Agriculture, Forestry and Fisheries (DAFF). 2011. Maize Market Value Chain 9. Department of Agriculture, Forestry and Fisheries (DAFF). 2011. Profile of the South African Forestry and Wood Products Market Value Chain. 10. Economic Outlook Report XV11. Agricultural Research Council (ARC). Agricultural Economics and Capacity Development Division. March 2015 11. Economic Outlook Report XV. Agricultural Research Council (ARC). Agricultural Economics and Capacity Development Division. September 2013 12. Economic profile of the agro-processing industry in South Africa: 1970-2010, www.nda.agric.za, Accessed: 24/11/2015 13. Kotler, P and Keller, K.L. 2012. A framework for marketing management. 5th ed. Pearson Education Limited. Harlow. 14. DAFF, 2015A. Abstract of Agricultural Statistics. Department of Agriculture, Forestry and Fisheries, Pretoria. 15. DAFF, 2015B. Trends in the Agricultural Sector, 2014. Department of Agriculture, Forestry and Fisheries, Pretoria. 16. DAFF, 2015. Crops and Markets, first quarter 2015. Vol 96, no. 963. Issued by the Directorate Statistics and Economic Analysis. Department of Agriculture, Forestry and Fisheries, Pretoria. 17. FOASTAT, 2015. Food and Agriculture Organization of the United Nations: Statistics Division. FOASTAT, Rome. Accessed: November 2015. Website: http://faostat.fao.org/ 18. Grain SA. 2015. Market Reports [Online] Available at: http://www.grainsa.co.za/pages/industry-reports/market-reports
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19. Lobell, D.B., Burke, M.B., Tebaldi, C., Mastrandrea, M.D., Falcon, W.P. and Naylor, R.L 2008. Prioritizing climate change adaptation needs for food security in 2030. Science, Vol. 319 (5863). 20. Malherbe, J., Tackrah, A. 2003. Long term average ten daily 1km X 1km temperature, rainfall and evaporation grid surfaces modelled from weather station data with a long term recording period. Unpublished. ARC-Institute for Soil, Climate and Water, Pretoria. 21. Olivier, G. C. (2004). An Analysis of the Beef Supply Chain: From Farm to Fork. Johannesburg: Rand Afrikaans University. 22. Red Meat Levy Admin, 2015. Total Slaughters – Nov. 2013 to Oct. 2014.Red Meat Levy Admin, Pretoria. Accessed: November 2015.Website: www.levyadmin.co.za 23. Supply and demand study of softwood sawlog and sawn timber in South Africa, www.nda.agric.za, Accessed: 25/11/2015 24. Status of South African forestry, www.fao.org, Accessed: 23/11/2015 25. South African Tourism (SAT). 2014. 2013 Annual Tourism Report. 26. Statistics South Africa (Stats SA). 2002. Census 2001. Statistics South Africa: Pretoria. 27. Statistics South Africa (Stats SA). 2007. Census of Commercial Agriculture 2007 (Eastern Cape). Stats SA: Pretoria. 28. Statistics South Africa (Stats SA). 2012. Census 2011. Statistics South Africa: Pretoria. 29. Statistics South Africa (Stats SA). 2014. Quarterly Labour Force Survey, 4th Quarter 2013. Statistics South Africa: Pretoria. 30. Statistics South Africa (Stats SA).2014. Survey of Employers and the self-employed 2013. Statistics South Africa: Pretoria. 31. Wee, H., Yang, M., Chou, C. and Padilan, M.V. 2012. Renewable energy supply chains, performance, application barriers, and strategies for further development. Renewable and Sustainable Energy Reviews Vol. 16:8, pp. 5451 – 5465
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Annexure A – Detailed CAPEX
This Annexure lists all the capital requirements as summarized in Section 11.6
Table 1: CAPEX – FPSU Category Amount (R) Consolidation/Collection Point 1 844 940.00 Cold Storage 733 850.00 Warehouse + Office 391 360.00 Fencing 592 500.00 Parking 24 480.00 Electricity connection 37 750.00 Bulk water connection 65 000.00 Buildings 2 711 340.00 Agriculture extension and support office 155 820.00 Mechanization centre and workshop 175 000.00 Warehouse facility 489 200.00 Cold storage 1 174 160.00 Retail 271 800.00 Auction facility 87 500.00 Agri-tourism facility 122 300.00 Training facility 235 560.00 Infrastructure 4 222 450.00 Bulk water connection 65 000.00 Electricity connection 37 750.00 Road 3 500 000.00 Fencing + installation 592 500.00 Parking 27 200.00 Equipment – Beef* 4 153 306.00 Farm vehicles 472 150.00 Transport vehicles 3 205 400.00 Implements 120 000.00 Processing equipment 355 756.00 Equipment – Vegetables* 8 410 535.00 Farm vehicles 747 572.00 Transport vehicles 6 273 867.00 Implements 863 611.00 Processing equipment 525 485.00
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Category Amount (R) Equipment – Maize* 6 841 253.00 Farm vehicles 1 508 815.00 Transport vehicles 2 756 000.00 Implements 2 569 936.00 Processing equipment 6 500.00
Total 28 813 824.00 *Average per FPSU
Table 3: CAPEX – Agri-Hub Category Amount (R) Buildings 23 536 800.00 Offices, ablutions, etc. 3 684 000.00 Training facility 3 926 000.00 Warehouse + processing facility 7 338 000.00 Retail 2 718 000.00 Cold storage 5 870 800.00 Infrastructure 17 672 750.00 Water bulk connection 65 000.00 Electricity connection 188 750.00 Road 7 000 000.00 Fencing + installation 9 875 000.00 Parking 544 000.00 Transport Vehicles 5 000 000.00 Equipment – Beef 28 000 000.00 Equipment – Vegetables 5 000 000.00 Equipment – Maize 7 000 000.00
Total 86 209 550.00
Table 4: CAPEX – RUMC Category Amount (R) Buildings 4 584 210.00 Offices, ablutions, etc. 779 100.00 Warehouse 733 800.00 Retail 869 760.00 Cold storage 2 201 550.00 Infrastructure 4 785 100.00 Water bulk connection 65 000.00 Electricity connection 151 000.00 Road 3 500 000.00 Fencing + installation 987 500.00
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Category Amount (R) Parking 81 600.00 Equipment 5 080 000.00 Information technology 200 000.00 Internet connectivity 190 000.00 Software solutions 890 000.00 Furniture and fittings 3 800 000.00
Total 14 449 310.00
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